STRAP	RATIO CALL SPREAD
About Strategy	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin Read more..	Ratio Call Spread Option Strategy  As the name suggests, a ratio of 2:1 is followed i.e. buy 1 ITM Call and simultaneously sell OTM Calls double the number of ITM Calls (In this case 2). This strategy is used by 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 since he is .. Read more..

STRAP Vs RATIO CALL SPREAD - Details

	STRAP	RATIO CALL SPREAD
Market View	Neutral	Neutral
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option)
Number Of Positions	3	3
Strategy Level	Beginners	Beginners
Reward Profile	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid	Limited
Risk Profile	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts	Unlimited
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received

STRAP Vs RATIO CALL SPREAD - When & How to use ?

	STRAP	RATIO CALL SPREAD
Market View	Neutral	Neutral
When to use?	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.	This strategy is used by 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 since he is selling two calls.
Action	Buy 2 ATM Call Option, Buy 1 ATM Put Option	Buy 1 ITM Call, Sell 2 OTM Calls
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Upper Breakeven Point = Strike Price of Short Calls + (Points of Maximum Profit / Number of Uncovered Calls), Lower Breakeven Point = Strike Price of Long Call +/- Net Premium Paid or Received

STRAP Vs RATIO CALL SPREAD - Risk & Reward

	STRAP	RATIO CALL SPREAD
Maximum Profit Scenario	UNLIMITED	Strike Price of Short Call - Strike Price of Long Call + Net Premium Received - Commissions Paid
Maximum Loss Scenario	Net Premium Paid	Price of Underlying - Strike Price of Short Calls - Max Profit + Commissions Paid
Risk	Limited	Unlimited
Reward	Unlimited	Limited

STRAP Vs RATIO CALL SPREAD - Strategy Pros & Cons

	STRAP	RATIO CALL SPREAD
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	Variable Ratio Write
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	• Unlimited potential loss. • Complex strategy with limited profit.
Advantages	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.	• Downside risk is almost zero. • Investors can book profit from share prices moving within given limits. • Trader can maximise profit when the share closes at the upper breakeven point.