Compare Strategies
| DIAGONAL BEAR PUT SPREAD | SYNTHETIC LONG CALL | |
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| About Strategy |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
Synthetic Long Call Option StrategyA trader is bullish in nature for short term, but also fearful about the downside risk associated with it. Here, a trader wants to hold an underlying asset either in physical form like in case of commodities or demat (electronic) form in case of stocks. But he is always exposed to downside risk and in order to mitigate his losses, .. |
DIAGONAL BEAR PUT SPREAD Vs SYNTHETIC LONG CALL - Details
| DIAGONAL BEAR PUT SPREAD | SYNTHETIC LONG CALL | |
|---|---|---|
| Market View | Bearish | Bullish |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | When Price of Underlying > Purchase Price of Underlying + Premium Paid |
| Risk Profile | Limited | Limited (Maximum loss happens when the price of instrument move above from the strike price of put) |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Underlying Price + Put Premium |
DIAGONAL BEAR PUT SPREAD Vs SYNTHETIC LONG CALL - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | SYNTHETIC LONG CALL | |
|---|---|---|
| Market View | Bearish | Bullish |
| When to use? | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset | A trader is bullish in nature for short term, but also fearful about the downside risk associated with it. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buy 1 ATM Put or OTM Put |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Underlying Price + Put Premium |
DIAGONAL BEAR PUT SPREAD Vs SYNTHETIC LONG CALL - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | SYNTHETIC LONG CALL | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Current Price - Purchase Price - Premium Paid |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Premium Paid |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
DIAGONAL BEAR PUT SPREAD Vs SYNTHETIC LONG CALL - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | SYNTHETIC LONG CALL | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Protective Put, Long Call |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | •Chances of loss if the underlying goes down. •Incur losses if option is exercised. |
| Advantages | The Risk is limited. | •Limited risk, unlimited profit. •Protection to your long-term holdings. • Limited loss to the to the premium paid for Put option. |