Compare Strategies
| LONG CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
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| About Strategy |
Long Call Butterfly Option StrategyA trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho |
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 CALL BUTTERFLY Vs STOCK REPAIR - Details
| LONG CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call 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 = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium |
LONG CALL BUTTERFLY Vs STOCK REPAIR - When & How to use ?
| LONG CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| When to use? | This strategy should be used when you're expecting no volatility in the price of the underlying. | 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 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call | Buy 1 ATM Call, Sell 2 OTM Calls |
| Breakeven Point | Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium |
LONG CALL BUTTERFLY Vs STOCK REPAIR - Risk & Reward
| LONG CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Adjacent strikes - Net premium debit. | |
| Maximum Loss Scenario | Net Premium Paid | |
| Risk | Limited | Limited |
| Reward | Limited | Unlimited |
LONG CALL BUTTERFLY Vs STOCK REPAIR - Strategy Pros & Cons
| LONG CALL BUTTERFLY | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | - | |
| Disadvantage | • Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum. | • 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. |