Compare Strategies
SHORT CALL | BULL PUT SPREAD | |
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About Strategy |
Short Call Option StrategyA trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders. However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited. If the strategy |
Bull Put Spread Option StrategyBull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem .. |
SHORT CALL Vs BULL PUT SPREAD - Details
SHORT CALL | BULL PUT SPREAD | |
---|---|---|
Market View | Bearish | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 2 |
Strategy Level | Advance | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Strike Price of Short Call + Premium Received | Strike price of short put - net premium paid |
SHORT CALL Vs BULL PUT SPREAD - When & How to use ?
SHORT CALL | BULL PUT SPREAD | |
---|---|---|
Market View | Bearish | Bullish |
When to use? | It is an aggressive strategy and involves huge risks. It should be used only in case where trader is certain about the bearish market view on the underlying. | Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall. |
Action | Sell or Write Call Option | Buy OTM Put Option, Sell ITM Put Option |
Breakeven Point | Strike Price of Short Call + Premium Received | Strike price of short put - net premium paid |
SHORT CALL Vs BULL PUT SPREAD - Risk & Reward
SHORT CALL | BULL PUT SPREAD | |
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Maximum Profit Scenario | Max Profit = Premium Received | Max Profit = Net Premium Received |
Maximum Loss Scenario | Loss Occurs When Price of Underlying > Strike Price of Short Call + Premium Received | Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
SHORT CALL Vs BULL PUT SPREAD - Strategy Pros & Cons
SHORT CALL | BULL PUT SPREAD | |
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Similar Strategies | Covered Put, Covered Calls | Bull Call Spread, Bear Put Spread, Collar |
Disadvantage | • Unlimited risk to the upside underlying stocks. • Potential loss more than the premium collected. | • Limited profit potential. • In loss situations, time decay may go against you. |
Advantages | • With the help of this strategy, traders can book profit from falling prices in the underlying asset. • Less investment, more profit. • Traders can book profit when underlying stock price fall, move sideways or rise by a small amount. | • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk. |