Compare Strategies
DIAGONAL BULL CALL SPREAD | BEAR CALL SPREAD | |
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About Strategy |
Diagonal Bull Call Spread Option StrategyThis strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option. Risk:
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Bear Call Spread Option StrategyBear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r .. |
DIAGONAL BULL CALL SPREAD Vs BEAR CALL SPREAD - Details
DIAGONAL BULL CALL SPREAD | BEAR CALL SPREAD | |
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Market View | Bullish | Bearish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Short Call + Net Premium Received |
DIAGONAL BULL CALL SPREAD Vs BEAR CALL SPREAD - When & How to use ?
DIAGONAL BULL CALL SPREAD | BEAR CALL SPREAD | |
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Market View | Bullish | Bearish |
When to use? | This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Buy OTM Call Option, Sell ITM Call Option |
Breakeven Point | Strike Price of Short Call + Net Premium Received |
DIAGONAL BULL CALL SPREAD Vs BEAR CALL SPREAD - Risk & Reward
DIAGONAL BULL CALL SPREAD | BEAR CALL SPREAD | |
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Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | |
Risk | Limited | Limited |
Reward | Limited | Limited |
DIAGONAL BULL CALL SPREAD Vs BEAR CALL SPREAD - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | BEAR CALL SPREAD | |
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Similar Strategies | Bull Put Spread | Bear Put Spread, Bull Call Spread |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | |
Advantages | • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. |