Compare Strategies
LONG CALL | BULL PUT SPREAD | |
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About Strategy |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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Bull Put Spread Option StrategyBull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem .. |
LONG CALL Vs BULL PUT SPREAD - Details
LONG CALL | BULL PUT SPREAD | |
---|---|---|
Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 2 |
Strategy Level | Beginner Level | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price + Premium | Strike price of short put - net premium paid |
LONG CALL Vs BULL PUT SPREAD - When & How to use ?
LONG CALL | BULL PUT SPREAD | |
---|---|---|
Market View | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) | Bullish |
When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. |
Action | Buying Call option | Buy OTM Put Option, Sell ITM Put Option |
Breakeven Point | Strike price + Premium | Strike price of short put - net premium paid |
LONG CALL Vs BULL PUT SPREAD - Risk & Reward
LONG CALL | BULL PUT SPREAD | |
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Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Max Profit = Net Premium Received |
Maximum Loss Scenario | Premium Paid | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received |
Risk | Limited | Limited |
Reward | Unlimited | Limited |
LONG CALL Vs BULL PUT SPREAD - Strategy Pros & Cons
LONG CALL | BULL PUT SPREAD | |
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Similar Strategies | Protective Put | Bull Call Spread, Bear Put Spread, Collar |
Disadvantage | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. | • Limited profit potential. • In loss situations, time decay may go against you. |
Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. |