Compare Strategies
| IRON BUTTERFLY | MARRIED PUT | |
|---|---|---|
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| About Strategy |
Iron Butterfly Option StrategyThis strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. A trader will buy 1 OTM Put Option, sell 1 ATM Put Option, sell 1 ATM Call Option, buy 1 OTM Call Option. Due to offsetting of long and short positions, this strategy bags limited profit with limited risk.
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Married Put Option StrategyThis strategy is applied when trader goes long on the underlying asset i.e. he buys the stock in cash market. He has a bullish view and expects the market to rise in the near future, but simultaneously has the fear of downward movement of the markets. In order to cover his position from vulnerabilities he buys one ATM Put Option of the same underlying asset. Here, a trader wi .. |
IRON BUTTERFLY Vs MARRIED PUT - Details
| IRON BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | PE (Put Option) |
| Number Of Positions | 4 | 1 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received | Purchase Price of Underlying + Premium Paid |
IRON BUTTERFLY Vs MARRIED PUT - When & How to use ?
| IRON BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy is implemented when a trader is bearish on the volatility of market and neutral on the market movements. | This Strategy work when the investor goes long in any stock. He expects the rise in market in future. |
| Action | Buy 1 OTM Put, Sell 1 ATM Put, Sell 1 ATM Call, Buy 1 OTM Call | Buy 250 XYZ Shares, Buy 1 ATM Put Option |
| Breakeven Point | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received | Purchase Price of Underlying + Premium Paid |
IRON BUTTERFLY Vs MARRIED PUT - Risk & Reward
| IRON BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Maximum Profit Scenario | Net Premium Received - Commissions Paid | Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid |
| Maximum Loss Scenario | Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Max Loss = Premium Paid + Commissions Paid |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
IRON BUTTERFLY Vs MARRIED PUT - Strategy Pros & Cons
| IRON BUTTERFLY | MARRIED PUT | |
|---|---|---|
| Similar Strategies | Long Put Butterfly, Neutral Calendar Spread | Long Call |
| Disadvantage | • Large commissions involved. • Probability of losses are higher. | Cost of the put options eats into profit margin. |
| Advantages | • Less amount of capital investment, steady income with low risk. • Traders can predict maximum loss and profit. • Versatile strategy, investors can transform position into bear call spread or bull put spread easily. | Unlimited Profit and Limited Risk |