Compare Strategies
| LONG STRANGLE | STOCK REPAIR | |
|---|---|---|
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| About Strategy |
Long Strangle Option StrategyA Strangle is similar to Straddle. In Strangle, a trader will purchase one OTM Call Option and one OTM Put Option, of the same expiry date and the same underlying asset. This strategy will reduce the entry cost for trader and it is also cheaper than straddle. A trader will make profits, if the market moves sharply in either direction and gives extra-ordinary returns in the |
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 .. |
LONG STRANGLE Vs STOCK REPAIR - Details
| LONG STRANGLE | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
| Number Of Positions | 2 | 3 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium |
LONG STRANGLE Vs STOCK REPAIR - When & How to use ?
| LONG STRANGLE | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy is used in special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc. | 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 | Buy OTM Call Option, Buy OTM Put Option | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium |
LONG STRANGLE Vs STOCK REPAIR - Risk & Reward
| LONG STRANGLE | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Profit = Price of Underlying - Strike Price of Long Call - Net Premium Paid | |
| Maximum Loss Scenario | Max Loss = Net Premium Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
LONG STRANGLE Vs STOCK REPAIR - Strategy Pros & Cons
| LONG STRANGLE | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Long Straddle, Short Strangle | |
| Disadvantage | • Require significant price movement to book profit. • Traders can lose more money if the underlying asset stayed stagnant. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Able to book profit, no matter if the underlying asset goes in either direction. • Limited loss to the debit paid. • If the underlying asset continues to move in one direction then you can book Unlimited profit . | • 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. |