PROTECTIVE PUT	RATIO CALL SPREAD
About Strategy	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..	Ratio Call Spread Option Strategy  As the name suggests, a ratio of 2:1 is followed i.e. buy 1 ITM Call and simultaneously sell OTM Calls double the number of ITM Calls (In this case 2). This strategy is used by 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 since he is .. Read more..

PROTECTIVE PUT Vs RATIO CALL SPREAD - Details

	PROTECTIVE PUT	RATIO CALL SPREAD
Market View	Bullish	Neutral
Type (CE/PE)	PE (Put Option)	CE (Call Option)
Number Of Positions	1	3
Strategy Level	Beginners	Beginners
Reward Profile	Unlimited	Limited
Risk Profile	Limited	Unlimited
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received

PROTECTIVE PUT Vs RATIO CALL SPREAD - When & How to use ?

	PROTECTIVE PUT	RATIO CALL SPREAD
Market View	Bullish	Neutral
When to use?	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.	This strategy is used by 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 since he is selling two calls.
Action	Buy 1 ATM Put	Buy 1 ITM Call, Sell 2 OTM Calls
Breakeven Point	Purchase Price of Underlying + Premium Paid	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received

PROTECTIVE PUT Vs RATIO CALL SPREAD - Risk & Reward

	PROTECTIVE PUT	RATIO CALL SPREAD
Maximum Profit Scenario	Price of Underlying - Purchase Price of Underlying - Premium Paid	Strike Price of Short Call - Strike Price of Long Call + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid	Price of Underlying - Strike Price of Short Calls - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Unlimited	Limited

PROTECTIVE PUT Vs RATIO CALL SPREAD - Strategy Pros & Cons

	PROTECTIVE PUT	RATIO CALL SPREAD
Similar Strategies	Long Call, Call Backspread	Variable Ratio Write
Disadvantage	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.	• Unlimited potential loss. • Complex strategy with limited profit.
Advantages	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.	• Downside risk is almost zero. • Investors can book profit from share prices moving within given limits. • Trader can maximise profit when the share closes at the upper breakeven point.