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Comparision (DIAGONAL BULL CALL SPREAD VS SHORT PUT)

 

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  DIAGONAL BULL CALL SPREAD SHORT PUT
About Strategy

Diagonal Bull Call Spread Option Strategy

This 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.

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Details

DIAGONAL BULL CALL SPREAD SHORT PUT
Market View Bullish Bullish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 1
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike Price - Premium

DIAGONAL BULL CALL SPREAD Vs SHORT PUT - When & How to use ?

DIAGONAL BULL CALL SPREAD SHORT PUT
Market View Bullish Bullish
When to use? This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call Sell Put Option
Breakeven Point Strike Price - Premium

DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Risk & Reward

DIAGONAL BULL CALL SPREAD SHORT PUT
Maximum Profit Scenario Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Unlimited (When the price of the underlying falls.)
Risk Limited Unlimited
Reward Limited Limited

DIAGONAL BULL CALL SPREAD Vs SHORT PUT - Strategy Pros & Cons

DIAGONAL BULL CALL SPREAD SHORT PUT
Similar Strategies Bull Put Spread Bull Put Spread, Short Starddle
Disadvantage • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

DIAGONAL BULL CALL SPREAD

SHORT PUT