Compare Strategies
| REVERSE IRON CONDOR | DIAGONAL BEAR PUT SPREAD | |
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| About Strategy |
Reverse Iron Condor Option StrategyReverse Iron Condor as the name suggests is the opposite of Iron Condors. In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction. Here a trader will buy 1 OTM Call Option, sell 1 Deep OTM Call Option, buy 1 OTM Put Option, sell 1 Deep OTM Put Option. This strategy also |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
REVERSE IRON CONDOR Vs DIAGONAL BEAR PUT SPREAD - Details
| REVERSE IRON CONDOR | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Neutral | Bearish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | PE (Put Option) |
| Number Of Positions | 4 | 2 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
REVERSE IRON CONDOR Vs DIAGONAL BEAR PUT SPREAD - When & How to use ?
| REVERSE IRON CONDOR | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Neutral | Bearish |
| When to use? | In Reverse Iron Condor, a trader is bullish about volatility and expects the market to make a significant move in the near future in either direction | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset |
| Action | Buy 1 OTM Put, Sell 1 OTM Put (Lower Strike), Buy 1 OTM Call, Sell 1 OTM Call (Higher Strike) | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option |
| Breakeven Point | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
REVERSE IRON CONDOR Vs DIAGONAL BEAR PUT SPREAD - Risk & Reward
| REVERSE IRON CONDOR | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month |
| Maximum Loss Scenario | Net Premium Paid + Commissions Paid | When the stock trades up above the long-term put strike price. |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
REVERSE IRON CONDOR Vs DIAGONAL BEAR PUT SPREAD - Strategy Pros & Cons
| REVERSE IRON CONDOR | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Similar Strategies | Short Condor | Bear Put Spread and Bear Call Spread |
| Disadvantage | • Potential loss is higher than gain. • Limited profit. | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. |
| Advantages | • Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits. | The Risk is limited. |