Compare Strategies
RATIO PUT SPREAD | IRON CONDORS | |
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About Strategy |
Ratio Put Spread Option StrategyThis strategy involves buying ITM Puts and simultaneously selling OTM Puts, double the number of ITM Puts. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. |
Iron Condors Option StrategyIron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option. .. |
RATIO PUT SPREAD Vs IRON CONDORS - Details
RATIO PUT SPREAD | IRON CONDORS | |
---|---|---|
Market View | Neutral | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 3 | 4 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts) | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received |
RATIO PUT SPREAD Vs IRON CONDORS - When & How to use ?
RATIO PUT SPREAD | IRON CONDORS | |
---|---|---|
Market View | Neutral | Neutral |
When to use? | This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. | When a trader tries to make profit from low volatility in the price of the underlying asset. |
Action | Buy 1 ITM Put, Sell 2 OTM Puts | Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 1 OTM Call (Higher Strike) |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put +/- Net Premium Received or Paid, Lower Breakeven Point = Strike Price of Short Puts - (Points of Maximum Profit / Number of Uncovered Puts) | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received |
RATIO PUT SPREAD Vs IRON CONDORS - Risk & Reward
RATIO PUT SPREAD | IRON CONDORS | |
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Maximum Profit Scenario | Strike Price of Long Put - Strike Price of Short Put + Net Premium Received - Commissions Paid | Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Strike Price of Short - Price of Underlying - Max Profit + Commissions Paid | Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
RATIO PUT SPREAD Vs IRON CONDORS - Strategy Pros & Cons
RATIO PUT SPREAD | IRON CONDORS | |
---|---|---|
Similar Strategies | Short Straddle (Sell Straddle), Short Strangle (Sell Strangle) | Long Put Butterfly, Neutral Calendar Spread |
Disadvantage | • Unlimited potential risk. • Limited profit. | • Full of risk. • Unlimited maximum loss. |
Advantages | • Directional strategy so that there is either no upside or downside risk. • Able to profit even if trader is neutral on the market. • Higher probability of profit. | • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price. |