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Comparision (SHORT STRADDLE VS BULL CALENDER SPREAD )

 

Compare Strategies

  SHORT STRADDLE BULL CALENDER SPREAD
About Strategy

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an

Bull Calendar Spread Option Strategy

This strategy is implemented when a trader is bullish on the underlying stock/index in the short term say 2 months or so. A trader will write one Near Month OTM Call Option and buy one next Month OTM Call Option, thereby reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when a trader wants to make prof ..

SHORT STRADDLE Vs BULL CALENDER SPREAD - Details

SHORT STRADDLE BULL CALENDER SPREAD
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Advance Beginners
Reward Profile Limited Unlimited
Risk Profile Unlimited Limited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Stock Price when long call value is equal to net debit.

SHORT STRADDLE Vs BULL CALENDER SPREAD - When & How to use ?

SHORT STRADDLE BULL CALENDER SPREAD
Market View Neutral Bullish
When to use? This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset. This strategy is used when a trader wants to make profit from a steady increase in the stock price over a short period of time.
Action Sell Call Option, Sell Put Option Sell 1 Near-Term OTM Call, Buy 1 Long-Term OTM Call
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Stock Price when long call value is equal to net debit.

SHORT STRADDLE Vs BULL CALENDER SPREAD - Risk & Reward

SHORT STRADDLE BULL CALENDER SPREAD
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid You have unlimited profit potential to the upside.
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Max Loss = Premium Paid + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

SHORT STRADDLE Vs BULL CALENDER SPREAD - Strategy Pros & Cons

SHORT STRADDLE BULL CALENDER SPREAD
Similar Strategies Short Strangle The Collar, Bull Put Spread
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • Limited profit even if underlying asset rallies. • If the short call options are assigned when the underlying asset rallies then losses can be sustained.
Advantages • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option . • Limited losses to the net debit. • Enable trader to book profit even if underlying asset stays stagnant. • If the market trends reverse, cashing in from stock price movement at limited risk.

SHORT STRADDLE

BULL CALENDER SPREAD