Compare Strategies
| DIAGONAL BEAR PUT SPREAD | BULL CALL SPREAD | |
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| About Strategy |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
DIAGONAL BEAR PUT SPREAD Vs BULL CALL SPREAD - Details
| DIAGONAL BEAR PUT SPREAD | BULL CALL SPREAD | |
|---|---|---|
| Market View | Bearish | Bullish |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike price of purchased call + net premium paid |
DIAGONAL BEAR PUT SPREAD Vs BULL CALL SPREAD - When & How to use ?
| DIAGONAL BEAR PUT SPREAD | BULL CALL SPREAD | |
|---|---|---|
| Market View | Bearish | Bullish |
| When to use? | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset | This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. |
| Action | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option | Buy ITM Call Option, Sell OTM Call Option |
| Breakeven Point | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. | Strike price of purchased call + net premium paid |
DIAGONAL BEAR PUT SPREAD Vs BULL CALL SPREAD - Risk & Reward
| DIAGONAL BEAR PUT SPREAD | BULL CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid |
| Maximum Loss Scenario | When the stock trades up above the long-term put strike price. | Net Premium Paid |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
DIAGONAL BEAR PUT SPREAD Vs BULL CALL SPREAD - Strategy Pros & Cons
| DIAGONAL BEAR PUT SPREAD | BULL CALL SPREAD | |
|---|---|---|
| Similar Strategies | Bear Put Spread and Bear Call Spread | Collar |
| Disadvantage | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
| Advantages | The Risk is limited. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |