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Comparision (SHORT STRADDLE VS BEAR CALL SPREAD)

 

Compare Strategies

  SHORT STRADDLE BEAR CALL SPREAD
About Strategy

Short Straddle Option strategy

This 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

Bear Call Spread Option Strategy 

Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r ..

SHORT STRADDLE Vs BEAR CALL SPREAD - Details

SHORT STRADDLE BEAR CALL SPREAD
Market View Neutral Bearish
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option)
Number Of Positions 2 2
Strategy Level Advance Beginners
Reward Profile Limited Limited
Risk Profile Unlimited Limited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Strike Price of Short Call + Net Premium Received

SHORT STRADDLE Vs BEAR CALL SPREAD - When & How to use ?

SHORT STRADDLE BEAR CALL SPREAD
Market View Neutral Bearish
When to use? 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. This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action Sell Call Option, Sell Put Option Buy OTM Call Option, Sell ITM Call Option
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Strike Price of Short Call + Net Premium Received

SHORT STRADDLE Vs BEAR CALL SPREAD - Risk & Reward

SHORT STRADDLE BEAR CALL SPREAD
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Unlimited Limited
Reward Limited Limited

SHORT STRADDLE Vs BEAR CALL SPREAD - Strategy Pros & Cons

SHORT STRADDLE BEAR CALL SPREAD
Similar Strategies Short Strangle Bear Put Spread, Bull Call Spread
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • Limited amount of profit. • Margin requirement, more commission charges.
Advantages • 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 . • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk.

SHORT STRADDLE

BEAR CALL SPREAD