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Comparision (RATIO PUT WRITE VS IRON CONDORS)

 

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  RATIO PUT WRITE IRON CONDORS
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.

Iron Condors Option Strategy

Iron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option. ..

RATIO PUT WRITE Vs IRON CONDORS - Details

RATIO PUT WRITE IRON CONDORS
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 Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

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

RATIO PUT WRITE IRON CONDORS
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 When a trader tries to make profit from low volatility in the price of the underlying asset.
Action Sell 2 ATM Puts Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 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 Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received

RATIO PUT WRITE Vs IRON CONDORS - Risk & Reward

RATIO PUT WRITE IRON CONDORS
Maximum Profit Scenario Net Premium Received - Commissions Paid Net Premium Received - 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 Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Limited

RATIO PUT WRITE Vs IRON CONDORS - Strategy Pros & Cons

RATIO PUT WRITE IRON CONDORS
Similar Strategies Short Strangle and Short Straddle Long Put Butterfly, Neutral Calendar Spread
Disadvantage • Potential loss is higher than gain. • Limited profit. • Full of risk. • Unlimited maximum loss.
Advantages • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price.

RATIO PUT WRITE

IRON CONDORS