Compare Strategies
DIAGONAL BULL CALL SPREAD | LONG COMBO | |
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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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Long Combo Option StrategyLong Combo Option Trading Strategy is implemented when a trader is bullish in nature and expects the stock price to rise in the near future. Here a trader will sell one ‘Out of the Money’ Put Option and buy one ‘Out of the Money’ Call Option. This trade will require less capital to implement since the amount required to buy the call will be covered by the amount received .. |
DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Details
DIAGONAL BULL CALL SPREAD | LONG COMBO | |
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Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Unlimited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Call Strike + Net Premium |
DIAGONAL BULL CALL SPREAD Vs LONG COMBO - When & How to use ?
DIAGONAL BULL CALL SPREAD | LONG COMBO | |
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Market View | Bullish | Bullish |
When to use? | This strategy is used when an investor Bullish on an underlying but don't have the required capital or the risk appetite to invest directly into it. | |
Action | Buy 1 Long-Term ITM Call Sell 1 Near-Term OTM Call | Sell OTM Put Option, Buy OTM Call Option |
Breakeven Point | Call Strike + Net Premium |
DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Risk & Reward
DIAGONAL BULL CALL SPREAD | LONG COMBO | |
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Maximum Profit Scenario | Underlying asset goes up and Call option exercised | |
Maximum Loss Scenario | Underlying asset goes down and Put option exercised | |
Risk | Limited | Unlimited |
Reward | Limited | Unlimited |
DIAGONAL BULL CALL SPREAD Vs LONG COMBO - Strategy Pros & Cons
DIAGONAL BULL CALL SPREAD | LONG COMBO | |
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Similar Strategies | Bull Put Spread | - |
Disadvantage | • Losses can keep on increasing as the price of stock goes down. • High risk strategy. | |
Advantages | • Capital investment is low and returns are high. • Unlimited reward, returns keep on increasing with the increase on stock price. • Leverage facility provided by this strategy is very beneficial. |