Compare Strategies
RATIO CALL SPREAD | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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About Strategy |
Ratio Call Spread Option StrategyAs the name suggests, a ratio of 2:1 is followed i.e. buy 1 ITM Call and simultaneously sell OTM Calls double the number of ITM Calls (In this case 2). This strategy is used by trader who is 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 since he is |
Christmas Tree Spread with Puts Option StrategyThis 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 .. |
RATIO CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Details
RATIO CALL SPREAD | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 3 | 6 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received | Lowest strike prices + the half premium – premium paid |
RATIO CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - When & How to use ?
RATIO CALL SPREAD | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
When to use? | This strategy is used by trader who is 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 since he is selling two calls. | This Strategy is used when an investor wants potential returns. |
Action | Buy 1 ITM Call, Sell 2 OTM Calls | Buying one ATM, Selling 3 Puts, Buying one more OTM Put |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received | Lowest strike prices + the half premium – premium paid |
RATIO CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Risk & Reward
RATIO CALL SPREAD | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Maximum Profit Scenario | Strike Price of Short Call - Strike Price of Long Call + Net Premium Received - Commissions Paid | Equal middle strike price – higher strike price – the premium |
Maximum Loss Scenario | Price of Underlying - Strike Price of Short Calls - Max Profit + Commissions Paid | Net Debit paid for the strategy. |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
RATIO CALL SPREAD Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Strategy Pros & Cons
RATIO CALL SPREAD | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Similar Strategies | Variable Ratio Write | Butterfly spreads |
Disadvantage | • Unlimited potential loss. • Complex strategy with limited profit. | • Potential profit is lower or limited. |
Advantages | • Downside risk is almost zero. • Investors can book profit from share prices moving within given limits. • Trader can maximise profit when the share closes at the upper breakeven point. | • The potential of loss is limited. |