Compare Strategies
DIAGONAL BULL CALL SPREAD | SHORT STRADDLE | |
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About Strategy |
Diagonal Bull Call Spread Option StrategyThis 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. Risk:
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Short Straddle Option strategyThis strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an .. |
DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Details
DIAGONAL BULL CALL SPREAD | SHORT STRADDLE | |
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Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium |
DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - When & How to use ?
DIAGONAL BULL CALL SPREAD | SHORT STRADDLE | |
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Market View | Bullish | Neutral |
When to use? | This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Sell Call Option, Sell Put Option |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium |
DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Risk & Reward
DIAGONAL BULL CALL SPREAD | SHORT STRADDLE | |
---|---|---|
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 | Unlimited |
Reward | Limited | Limited |
DIAGONAL BULL CALL SPREAD Vs SHORT STRADDLE - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | SHORT STRADDLE | |
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Similar Strategies | Bull Put Spread | Short Strangle |
Disadvantage | • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. | |
Advantages | • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option . |