Compare Strategies
| REVERSE IRON BUTTERFLY | STOCK REPAIR | |
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| About Strategy |
Reverse Iron Butterfly Option StrategyReverse Iron Butterfly as the name suggests is the opposite of Iron Butterfly. In Reverse Iron Butterfly, a trader is bullish on volatility and expects the market to make significant move in the near future in either directions. Here a trader will buy 1 ATM Call Option, sell 1 OTM Call Option, buy 1 ATM Put Option, sell 1 OTM Put Option. This strategy also bags lim |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has .. |
REVERSE IRON BUTTERFLY Vs STOCK REPAIR - Details
| REVERSE IRON BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
| Number Of Positions | 4 | 3 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Limited | Unlimited |
| 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 |
REVERSE IRON BUTTERFLY Vs STOCK REPAIR - When & How to use ?
| REVERSE IRON BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy is used when a trader is bullish on volatility and expects the market to make significant move in the near future in either directions. | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. |
| Action | Sell 1 OTM Put, Buy 1 ATM Put, Buy 1 ATM Call, Sell 1 OTM Call | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid |
REVERSE IRON BUTTERFLY Vs STOCK REPAIR - Risk & Reward
| REVERSE IRON BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid | |
| Maximum Loss Scenario | Net Premium Paid + Commissions Paid | |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
REVERSE IRON BUTTERFLY Vs STOCK REPAIR - Strategy Pros & Cons
| REVERSE IRON BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Short Put Butterfly, Short Condor | |
| Disadvantage | • Potential loss is higher than gain, complex strategy. • Not suitable for beginners. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| 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, volatile strategy. | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. |