Compare Strategies
LONG CALL | LONG PUT | |
---|---|---|
About Strategy |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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Long Put Option StrategyThis strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. |
LONG CALL Vs LONG PUT - Details
LONG CALL | LONG PUT | |
---|---|---|
Market View | Bullish | Bearish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 1 |
Strategy Level | Beginner Level | Beginners |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price + Premium | Strike Price of Long Put - Premium Paid |
LONG CALL Vs LONG PUT - When & How to use ?
LONG CALL | LONG PUT | |
---|---|---|
Market View | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) | Bearish |
When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. |
Action | Buying Call option | Buy Put Option |
Breakeven Point | Strike price + Premium | Strike Price of Long Put - Premium Paid |
LONG CALL Vs LONG PUT - Risk & Reward
LONG CALL | LONG PUT | |
---|---|---|
Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Profit = Strike Price of Long Put - Premium Paid |
Maximum Loss Scenario | Premium Paid | Max Loss = Premium Paid + Commissions Paid |
Risk | Limited | Limited |
Reward | Unlimited | Unlimited |
LONG CALL Vs LONG PUT - Strategy Pros & Cons
LONG CALL | LONG PUT | |
---|---|---|
Similar Strategies | Protective Put | Protective Call, Short Put |
Disadvantage | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. | • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. |
Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. |