Compare Strategies
| STOCK REPAIR | STRAP | |
|---|---|---|
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| About Strategy |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has |
Strap Option StrategyStrap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin .. |
STOCK REPAIR Vs STRAP - Details
| STOCK REPAIR | STRAP | |
|---|---|---|
| Market View | Bullish | Neutral |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
| Number Of Positions | 3 | 3 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid |
| Risk Profile | Limited | Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts |
| Breakeven Point | Strike Price of Calls/Puts + (Net Premium Paid/2) |
STOCK REPAIR Vs STRAP - When & How to use ?
| STOCK REPAIR | STRAP | |
|---|---|---|
| Market View | Bullish | Neutral |
| When to use? | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. | This strategy is used when the investor is bullish on the stock and expects volatility in the near future. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Buy 2 ATM Call Option, Buy 1 ATM Put Option |
| Breakeven Point | Strike Price of Calls/Puts + (Net Premium Paid/2) |
STOCK REPAIR Vs STRAP - Risk & Reward
| STOCK REPAIR | STRAP | |
|---|---|---|
| Maximum Profit Scenario | UNLIMITED | |
| Maximum Loss Scenario | Net Premium Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
STOCK REPAIR Vs STRAP - Strategy Pros & Cons
| STOCK REPAIR | STRAP | |
|---|---|---|
| Similar Strategies | Strip, Short Put Ladder, Short Call Ladder | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • To generate profit, there should be significant change in share price. • Expensive strategy. |
| Advantages | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. | • Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially. |