Compare Strategies
RATIO CALL WRITE | RATIO PUT WRITE | |
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About Strategy |
Ratio Call Write Option StrategyThis strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. |
Ratio Put Write Option StrategyThis strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. .. |
RATIO CALL WRITE Vs RATIO PUT WRITE - Details
RATIO CALL WRITE | RATIO PUT WRITE | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Beginners |
Reward Profile | Limited | Max Profit Achieved When Price of Underlying = Strike Price of Short Puts |
Risk Profile | Unlimited | Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
RATIO CALL WRITE Vs RATIO PUT WRITE - When & How to use ?
RATIO CALL WRITE | RATIO PUT WRITE | |
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Market View | Neutral | Neutral |
When to use? | This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. | This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future |
Action | Sell 2 ATM Calls | Sell 2 ATM Puts |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit |
RATIO CALL WRITE Vs RATIO PUT WRITE - Risk & Reward
RATIO CALL WRITE | RATIO PUT WRITE | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid | Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid |
Risk | Unlimited | Unlimited |
Reward | Limited | Limited |
RATIO CALL WRITE Vs RATIO PUT WRITE - Strategy Pros & Cons
RATIO CALL WRITE | RATIO PUT WRITE | |
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Similar Strategies | Variable Ratio Write | Short Strangle and Short Straddle |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • Potential loss is higher than gain. • Limited profit. |
Advantages |