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Comparision (RATIO PUT WRITE VS REVERSE IRON CONDOR)

 

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  RATIO PUT WRITE REVERSE IRON CONDOR
About Strategy

Ratio Put Write Option Strategy 

This 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.

Reverse Iron Condor Option Strategy

Reverse 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 ..

RATIO PUT WRITE Vs REVERSE IRON CONDOR - Details

RATIO PUT WRITE REVERSE IRON CONDOR
Market View Neutral Neutral
Type (CE/PE) PE (Put Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 4
Strategy Level Beginners Advance
Reward Profile Max Profit Achieved When Price of Underlying = Strike Price of Short Puts Limited
Risk Profile 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 Limited
Breakeven Point Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid

RATIO PUT WRITE Vs REVERSE IRON CONDOR - When & How to use ?

RATIO PUT WRITE REVERSE IRON CONDOR
Market View Neutral Neutral
When to use? 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 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
Action Sell 2 ATM Puts Buy 1 OTM Put, Sell 1 OTM Put (Lower Strike), Buy 1 OTM Call, Sell 1 OTM Call (Higher Strike)
Breakeven Point Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid

RATIO PUT WRITE Vs REVERSE IRON CONDOR - Risk & Reward

RATIO PUT WRITE REVERSE IRON CONDOR
Maximum Profit Scenario Net Premium Received - Commissions Paid Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid Net Premium Paid + Commissions Paid
Risk Unlimited Limited
Reward Limited Limited

RATIO PUT WRITE Vs REVERSE IRON CONDOR - Strategy Pros & Cons

RATIO PUT WRITE REVERSE IRON CONDOR
Similar Strategies Short Strangle and Short Straddle Short Condor
Disadvantage • Potential loss is higher than gain. • Limited profit. • Potential loss is higher than gain. • Limited profit.
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.

RATIO PUT WRITE

REVERSE IRON CONDOR