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Comparision (NEUTRAL CALENDAR SPREAD VS SHORT PUT)

 

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  NEUTRAL CALENDAR SPREAD SHORT PUT
About Strategy

Neutral Calendar Spread Option strategy 

This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option, hence reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when the trader wants to make money from the

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.

NEUTRAL CALENDAR SPREAD Vs SHORT PUT - Details

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

NEUTRAL CALENDAR SPREAD Vs SHORT PUT - When & How to use ?

NEUTRAL CALENDAR SPREAD SHORT PUT
Market View Neutral Bullish
When to use? This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option. This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Sell 1 Near-Term ATM Call, Buy 1 Long-Term ATM Call Sell Put Option
Breakeven Point - Strike Price - Premium

NEUTRAL CALENDAR SPREAD Vs SHORT PUT - Risk & Reward

NEUTRAL CALENDAR SPREAD SHORT PUT
Maximum Profit Scenario Maximum Profit Limited When underlying stock price remains unchanged on expiration of the near month options. Premium received in your account when you sell the Put Option.
Maximum Loss Scenario It occurs when the stock price goes down and stays down until expiration of the longer term options. Unlimited (When the price of the underlying falls.)
Risk Limited Unlimited
Reward Limited Limited

NEUTRAL CALENDAR SPREAD Vs SHORT PUT - Strategy Pros & Cons

NEUTRAL CALENDAR SPREAD SHORT PUT
Similar Strategies Long Put Butterfly, Iron Butterfly Bull Put Spread, Short Starddle
Disadvantage • Lower profitability • Must have enough experience. • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position. • 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.

NEUTRAL CALENDAR SPREAD

SHORT PUT