Compare Strategies
| STOCK REPAIR | STRIP | |
|---|---|---|
|
|
|
| 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 |
Strip Option StrategyStrip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the .. |
STOCK REPAIR Vs STRIP - Details
| STOCK REPAIR | STRIP | |
|---|---|---|
| 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 | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
STOCK REPAIR Vs STRIP - When & How to use ?
| STOCK REPAIR | STRIP | |
|---|---|---|
| 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. | When a trader is bearish on the market and bullish on volatility then he will implement this strategy. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Buy 1 ATM Call, Buy 2 ATM Puts |
| Breakeven Point | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) |
STOCK REPAIR Vs STRIP - Risk & Reward
| STOCK REPAIR | STRIP | |
|---|---|---|
| Maximum Profit Scenario | Price of Underlying - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - Price of Underlying) - Net Premium Paid | |
| Maximum Loss Scenario | Net Premium Paid + Commissions Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
STOCK REPAIR Vs STRIP - Strategy Pros & Cons
| STOCK REPAIR | STRIP | |
|---|---|---|
| Similar Strategies | Strap, Short Put Ladder | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position. |
| 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. | Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving. |