Compare Strategies
| DIAGONAL BEAR PUT SPREAD | LONG COMBO | |
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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. |
Long Combo Option StrategyLong Combo Option Trading Strategy is implemented when a trader is bullish in nature and expects the stock price to rise in the near future. Here a trader will sell one ‘Out of the Money’ Put Option and buy one ‘Out of the Money’ Call Option. This trade will require less capital to implement since the amount required to buy the call will be covered by the amount received .. |
DIAGONAL BEAR PUT SPREAD Vs LONG COMBO - Details
| DIAGONAL BEAR PUT SPREAD | LONG COMBO | |
|---|---|---|
| Market View | Bearish | Bullish |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) + PE (Put Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Limited | Unlimited |
| Risk Profile | Limited | Unlimited |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Call Strike + Net Premium |
DIAGONAL BEAR PUT SPREAD Vs LONG COMBO - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | LONG COMBO | |
|---|---|---|
| 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 | This strategy is used when an investor Bullish on an underlying but don't have the required capital or the risk appetite to invest directly into it. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Sell OTM Put Option, Buy OTM Call Option |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Call Strike + Net Premium |
DIAGONAL BEAR PUT SPREAD Vs LONG COMBO - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | LONG COMBO | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | Underlying asset goes up and Call option exercised |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Underlying asset goes down and Put option exercised |
| Risk | Limited | Unlimited |
| Reward | Limited | Unlimited |
DIAGONAL BEAR PUT SPREAD Vs LONG COMBO - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | LONG COMBO | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | - |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • Losses can keep on increasing as the price of stock goes down. • High risk strategy. |
| Advantages | The Risk is limited. | • Capital investment is low and returns are high. • Unlimited reward, returns keep on increasing with the increase on stock price. • Leverage facility provided by this strategy is very beneficial. |