Compare Strategies
LONG COMBO | LONG CALL | |
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About Strategy |
Long Combo Option StrategyLong Combo Option Trading Strategy is implemented when a trader is bullish in nature and expects the stock price to rise in the near future. Here a trader will sell one ‘Out of the Money’ Put Option and buy one ‘Out of the Money’ Call Option. This trade will require less capital to implement since the amount required to buy the call will be covered by the amount received |
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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LONG COMBO Vs LONG CALL - Details
LONG COMBO | LONG CALL | |
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Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 1 |
Strategy Level | Advance | Beginner Level |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Call Strike + Net Premium | Strike Price + Premium |
LONG COMBO Vs LONG CALL - When & How to use ?
LONG COMBO | LONG CALL | |
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Market View | Bullish | 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.) |
When to use? | This strategy is used when an investor Bullish on an underlying but don't have the required capital or the risk appetite to invest directly into it. | This strategy work when an investor expect the underlying instrument move in upward direction. |
Action | Sell OTM Put Option, Buy OTM Call Option | Buying Call option |
Breakeven Point | Call Strike + Net Premium | Strike price + Premium |
LONG COMBO Vs LONG CALL - Risk & Reward
LONG COMBO | LONG CALL | |
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Maximum Profit Scenario | Underlying asset goes up and Call option exercised | Underlying Asset close above from the strike price on expiry. |
Maximum Loss Scenario | Underlying asset goes down and Put option exercised | Premium Paid |
Risk | Unlimited | Limited |
Reward | Unlimited | Unlimited |
LONG COMBO Vs LONG CALL - Strategy Pros & Cons
LONG COMBO | LONG CALL | |
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Similar Strategies | - | Protective Put |
Disadvantage | • Losses can keep on increasing as the price of stock goes down. • High risk strategy. | • 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. |
Advantages | • Capital investment is low and returns are high. • Unlimited reward, returns keep on increasing with the increase on stock price. • Leverage facility provided by this strategy is very beneficial. | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. |