Compare Strategies
IRON CONDORS | RATIO PUT WRITE | |
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About Strategy |
Iron Condors Option StrategyIron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option. |
Ratio Put Write Option StrategyThis strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. .. |
IRON CONDORS Vs RATIO PUT WRITE - Details
IRON CONDORS | RATIO PUT WRITE | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | PE (Put Option) |
Number Of Positions | 4 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Max Profit Achieved When Price of Underlying = Strike Price of Short Puts |
Risk Profile | Limited | Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
IRON CONDORS Vs RATIO PUT WRITE - When & How to use ?
IRON CONDORS | RATIO PUT WRITE | |
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Market View | Neutral | Neutral |
When to use? | When a trader tries to make profit from low volatility in the price of the underlying asset. | This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future |
Action | Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 1 OTM Call (Higher Strike) | Sell 2 ATM Puts |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
IRON CONDORS Vs RATIO PUT WRITE - Risk & Reward
IRON CONDORS | RATIO PUT WRITE | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid |
Risk | Limited | Unlimited |
Reward | Limited | Limited |
IRON CONDORS Vs RATIO PUT WRITE - Strategy Pros & Cons
IRON CONDORS | RATIO PUT WRITE | |
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Similar Strategies | Long Put Butterfly, Neutral Calendar Spread | Short Strangle and Short Straddle |
Disadvantage | • Full of risk. • Unlimited maximum loss. | • Potential loss is higher than gain. • Limited profit. |
Advantages | • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price. |