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
Iron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option. ..
Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received
BEAR CALL SPREAD Vs IRON CONDORS - When & How to use ?
BEAR CALL SPREAD
IRON CONDORS
Market View
Bearish
Neutral
When to use?
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.
When a trader tries to make profit from low volatility in the price of the underlying asset.
Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received
BEAR CALL SPREAD Vs IRON CONDORS - Risk & Reward
BEAR CALL SPREAD
IRON CONDORS
Maximum Profit Scenario
Max Profit = Net Premium Received - Commissions Paid
Net Premium Received - Commissions Paid
Maximum Loss Scenario
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk
Limited
Limited
Reward
Limited
Limited
BEAR CALL SPREAD Vs IRON CONDORS - Strategy Pros & Cons
BEAR CALL SPREAD
IRON CONDORS
Similar Strategies
Bear Put Spread, Bull Call Spread
Long Put Butterfly, Neutral Calendar Spread
Disadvantage
• Limited amount of profit. • Margin requirement, more commission charges.
• Full of risk. • Unlimited maximum loss.
Advantages
• 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.
• Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price.