Compare Strategies
STRIP | SHORT STRADDLE | |
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About Strategy |
Strip Option StrategyStrip Strategy is the opposite of Strap Strategy. When a trader is bearish on the market and bullish on volatility then he will implement this strategy by buying two ATM Put Options & one ATM Call Option, of the same strike price, expiry date & underlying asset. If the prices move downwards then this strategy will make more profits compared to short straddle because of the |
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 .. |
STRIP Vs SHORT STRADDLE - Details
STRIP | SHORT STRADDLE | |
---|---|---|
Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 3 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium |
STRIP Vs SHORT STRADDLE - When & How to use ?
STRIP | SHORT STRADDLE | |
---|---|---|
Market View | Neutral | Neutral |
When to use? | When a trader is bearish on the market and bullish on volatility then he will implement this strategy. | 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 ATM Call, Buy 2 ATM Puts | Sell Call Option, Sell Put Option |
Breakeven Point | Upper Breakeven Point = Strike Price of Calls/Puts + Net Premium Paid, Lower Breakeven Point = Strike Price of Calls/Puts - (Net Premium Paid/2) | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium |
STRIP Vs SHORT STRADDLE - Risk & Reward
STRIP | SHORT STRADDLE | |
---|---|---|
Maximum Profit Scenario | Price of Underlying - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - Price of Underlying) - Net Premium Paid | Max Profit = Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Net Premium Paid + Commissions Paid | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received |
Risk | Limited | Unlimited |
Reward | Unlimited | Limited |
STRIP Vs SHORT STRADDLE - Strategy Pros & Cons
STRIP | SHORT STRADDLE | |
---|---|---|
Similar Strategies | Strap, Short Put Ladder | Short Strangle |
Disadvantage | Expensive., The share price must change significantly to generate profit., High Bid/Offer spread can have a negative influence on the position. | • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. |
Advantages | Profit is generated when the share price changes in any direction., Limited loss., The profit is potentially unlimited when share prices are moving. | • 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 . |