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Comparision (CALL BACKSPREAD VS CHRISTMAS TREE SPREAD WITH PUT OPTION)

 

Compare Strategies

  CALL BACKSPREAD CHRISTMAS TREE SPREAD WITH PUT OPTION
About Strategy

Call Backspread Option Trading 

This strategy is adopted by traders who are bullish in nature. He expects market and volatility to rise in the near future. A trader need not be direction specific here (i.e. an upward or downward trend, but a small bias towards an uptrend should always be present, as the gains will be much higher once the market moves up r

Christmas Tree Spread with Puts Option Strategy

This Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one put at strike price D, skipping strike price C, writes three calls at strike price B, and buying two calls at strike price A for same expiration dates for neutral to bearish forecast. An investor used this strategy to potential returns ..

CALL BACKSPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Details

CALL BACKSPREAD CHRISTMAS TREE SPREAD WITH PUT OPTION
Market View Bullish Bearish
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 3 6
Strategy Level Advance Advance
Reward Profile Unlimited Limited
Risk Profile Limited Limited
Breakeven Point Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss Lowest strike prices + the half premium – premium paid

CALL BACKSPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - When & How to use ?

CALL BACKSPREAD CHRISTMAS TREE SPREAD WITH PUT OPTION
Market View Bullish Bearish
When to use? This strategy is used when the investor expects the price of the stock to rise in the future. This Strategy is used when an investor wants potential returns.
Action Sell 1 ITM Call, BUY 2 OTM Call Buying one ATM, Selling 3 Puts, Buying one more OTM Put
Breakeven Point Lower breakeven = strike price of the short call, Upper breakeven = strike price of long calls + point of maximum loss Lowest strike prices + the half premium – premium paid

CALL BACKSPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Risk & Reward

CALL BACKSPREAD CHRISTMAS TREE SPREAD WITH PUT OPTION
Maximum Profit Scenario Unlimited profit potential if the stock goes in upward direction. Equal middle strike price – higher strike price – the premium
Maximum Loss Scenario Strike Price of long call - Strike Price of short call - Net premium received Net Debit paid for the strategy.
Risk Limited Limited
Reward Unlimited Limited

CALL BACKSPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Strategy Pros & Cons

CALL BACKSPREAD CHRISTMAS TREE SPREAD WITH PUT OPTION
Similar Strategies - Butterfly spreads
Disadvantage • Potential profit is lower or limited.
Advantages • Unlimited profit potential. • The potential of loss is limited.

CALL BACKSPREAD

CHRISTMAS TREE SPREAD WITH PUT OPTION