Compare Strategies
NEUTRAL CALENDAR SPREAD | CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY | |
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About Strategy |
Neutral Calendar Spread Option strategyThis 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 |
Christmas Tree Spread with Call Option StrategyThis Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one call at strike price A, skipping strike price B, writes three calls at strike price C, and buying two calls at strike price D for same expiration dates for neutral to bullish forecast. An investor used this strategy to potential retur .. |
NEUTRAL CALENDAR SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Details
NEUTRAL CALENDAR SPREAD | CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY | |
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Market View | Neutral | Bullish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 2 | 4 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Limited |
Breakeven Point | - | Lowest strike prices + premium paid – the half premium. |
NEUTRAL CALENDAR SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - When & How to use ?
NEUTRAL CALENDAR SPREAD | CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY | |
---|---|---|
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 is used when an investor wants potential returns. |
Action | Sell 1 Near-Term ATM Call, Buy 1 Long-Term ATM Call | • Buy 1 call , • Sell 3 calls, • Buy 2 calls |
Breakeven Point | - | Lowest strike prices + premium paid – the half premium. |
NEUTRAL CALENDAR SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Risk & Reward
NEUTRAL CALENDAR SPREAD | CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY | |
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Maximum Profit Scenario | Maximum Profit Limited When underlying stock price remains unchanged on expiration of the near month options. | Equal middle strike price – lower strike price – the premium |
Maximum Loss Scenario | It occurs when the stock price goes down and stays down until expiration of the longer term options. | Net Debit paid for the strategy. |
Risk | Limited | Limited |
Reward | Limited | Limited |
NEUTRAL CALENDAR SPREAD Vs CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY - Strategy Pros & Cons
NEUTRAL CALENDAR SPREAD | CHRISTMAS TREE SPREAD WITH CALL OPTION STRATEGY | |
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Similar Strategies | Long Put Butterfly, Iron Butterfly | CHRISTMAS TREE SPREAD WITH PUT OPTION |
Disadvantage | • Lower profitability • Must have enough experience. | • Potential profit is lower or limited. |
Advantages | • Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position. | • The potential of loss is limited. |