Compare Strategies
| STOCK REPAIR | BEAR CALL SPREAD | |
|---|---|---|
|
|
|
| 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 |
Bear Call Spread Option StrategyBear 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 .. |
STOCK REPAIR Vs BEAR CALL SPREAD - Details
| STOCK REPAIR | BEAR CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike Price of Short Call + Net Premium Received |
STOCK REPAIR Vs BEAR CALL SPREAD - When & How to use ?
| STOCK REPAIR | BEAR CALL SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| 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 you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Buy OTM Call Option, Sell ITM Call Option |
| Breakeven Point | Strike Price of Short Call + Net Premium Received |
STOCK REPAIR Vs BEAR CALL SPREAD - Risk & Reward
| STOCK REPAIR | BEAR CALL SPREAD | |
|---|---|---|
| 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 | Unlimited | Limited |
STOCK REPAIR Vs BEAR CALL SPREAD - Strategy Pros & Cons
| STOCK REPAIR | BEAR CALL SPREAD | |
|---|---|---|
| Similar Strategies | Bear Put Spread, Bull Call Spread | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Limited amount of profit. • Margin requirement, more commission charges. |
| 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. | • 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. |