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Comparision (BEAR CALL SPREAD VS PUT BACKSPREAD)

 

Compare Strategies

  BEAR CALL SPREAD PUT BACKSPREAD
About Strategy

Bear Call Spread Option Strategy 

Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r

Put Backspread Option Strategy

If the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns.

BEAR CALL SPREAD Vs PUT BACKSPREAD - Details

BEAR CALL SPREAD PUT BACKSPREAD
Market View Bearish Bearish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Advance
Reward Profile Limited
Risk Profile Limited
Breakeven Point Strike Price of Short Call + Net Premium Received

BEAR CALL SPREAD Vs PUT BACKSPREAD - When & How to use ?

BEAR CALL SPREAD PUT BACKSPREAD
Market View Bearish Bearish
When to use? This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action Buy OTM Call Option, Sell ITM Call Option
Breakeven Point Strike Price of Short Call + Net Premium Received

BEAR CALL SPREAD Vs PUT BACKSPREAD - Risk & Reward

BEAR CALL SPREAD PUT BACKSPREAD
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Limited Limited
Reward Limited Unlimited

BEAR CALL SPREAD Vs PUT BACKSPREAD - Strategy Pros & Cons

BEAR CALL SPREAD PUT BACKSPREAD
Similar Strategies Bear Put Spread, Bull Call Spread
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges.
Advantages • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk.

BEAR CALL SPREAD

PUT BACKSPREAD