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Comparision (RATIO CALL WRITE VS SHORT CALL CONDOR SPREAD)

 

Compare Strategies

  RATIO CALL WRITE SHORT CALL CONDOR SPREAD
About Strategy

Ratio Call Write Option Strategy 

This 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.

Short Call Condor Spread Option Strategy

Short Call Condor Spread is the opposite of Long Call Condor Spread i.e. sell 1 Deep ITM Call Option, buy 1 ITM Call Option, buy 1 OTM Call Option, sell 1 Deep OTM Call Option. Similar to Long Call Condor, the risk and rewards associated with this strategy are limited. Credit is received at the time of entering into this strategy.

RATIO CALL WRITE Vs SHORT CALL CONDOR SPREAD - Details

RATIO CALL WRITE SHORT CALL CONDOR SPREAD
Market View Neutral Volatile
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 2 4
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Unlimited Limited
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 Lower Breakeven = Lower Strike Price + Net Premium, Upper breakeven = Higher Strike Price - Net Premium

RATIO CALL WRITE Vs SHORT CALL CONDOR SPREAD - When & How to use ?

RATIO CALL WRITE SHORT CALL CONDOR SPREAD
Market View Neutral Volatile
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 used when an investor expect the price of the underlying stock to be very volatile.
Action Sell 2 ATM Calls Buy ITM Call Option + Buy OTM Call Option + Sell Deep OTM Call Option + Sell Deep ITM Call Option
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 Lower Breakeven = Lower Strike Price + Net Premium, Upper breakeven = Higher Strike Price - Net Premium

RATIO CALL WRITE Vs SHORT CALL CONDOR SPREAD - Risk & Reward

RATIO CALL WRITE SHORT CALL CONDOR SPREAD
Maximum Profit Scenario Net Premium Received - Commissions Paid Strike Price of Lower Strike Short Call - Strike Price of Lower Strike Long Call - Net Premium 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 Strike Price of Lower Strike Long Call - Strike Price of Lower Strike Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Limited

RATIO CALL WRITE Vs SHORT CALL CONDOR SPREAD - Strategy Pros & Cons

RATIO CALL WRITE SHORT CALL CONDOR SPREAD
Similar Strategies Variable Ratio Write Short Strangle
Disadvantage • Potential loss is higher than gain. • Limited profit. • Amount of profit is low in comparison with other strategies. • As this strategy has 4 legs so the brokerage cost is higher that will affect your profit.
Advantages • This strategy allows you to profit from highly volatile underlying assets moving in any direction. • Earn profit with little or no investment. • Wider profit zone.

RATIO CALL WRITE

SHORT CALL CONDOR SPREAD