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Comparision (SHORT PUT VS DIAGONAL BULL CALL SPREAD)

 

Compare Strategies

  SHORT PUT DIAGONAL BULL CALL SPREAD
About Strategy

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

Diagonal Bull Call Spread Option Strategy

This strategy is implemented by a trader when he is neutral – moderately bullish in the near-month contract and bullish in the mid-month contract. It involves sale of 1 Near-Month OTM Call Option and buying of 1 Mid Month ITM Call Option.

SHORT PUT Vs DIAGONAL BULL CALL SPREAD - Details

SHORT PUT DIAGONAL BULL CALL SPREAD
Market View Bullish Bullish
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 1 2
Strategy Level Beginners Beginners
Reward Profile Limited Limited
Risk Profile Unlimited Limited
Breakeven Point Strike Price - Premium

SHORT PUT Vs DIAGONAL BULL CALL SPREAD - When & How to use ?

SHORT PUT DIAGONAL BULL CALL SPREAD
Market View Bullish Bullish
When to use? This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Sell Put Option Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call
Breakeven Point Strike Price - Premium

SHORT PUT Vs DIAGONAL BULL CALL SPREAD - Risk & Reward

SHORT PUT DIAGONAL BULL CALL SPREAD
Maximum Profit Scenario Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Unlimited (When the price of the underlying falls.)
Risk Unlimited Limited
Reward Limited Limited

SHORT PUT Vs DIAGONAL BULL CALL SPREAD - Strategy Pros & Cons

SHORT PUT DIAGONAL BULL CALL SPREAD
Similar Strategies Bull Put Spread, Short Starddle Bull Put Spread
Disadvantage • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

SHORT PUT

DIAGONAL BULL CALL SPREAD