Compare Strategies
RATIO PUT WRITE | RATIO CALL WRITE | |
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About Strategy |
Ratio Put Write Option StrategyThis 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. |
Ratio Call Write Option StrategyThis strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is 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. .. |
RATIO PUT WRITE Vs RATIO CALL WRITE - Details
RATIO PUT WRITE | RATIO CALL WRITE | |
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Market View | Neutral | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 2 |
Strategy Level | Beginners | Beginners |
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 | Unlimited |
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 Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit |
RATIO PUT WRITE Vs RATIO CALL WRITE - When & How to use ?
RATIO PUT WRITE | RATIO CALL WRITE | |
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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 | This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. |
Action | Sell 2 ATM Puts | Sell 2 ATM Calls |
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 Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit |
RATIO PUT WRITE Vs RATIO CALL WRITE - Risk & Reward
RATIO PUT WRITE | RATIO CALL WRITE | |
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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 | Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid |
Risk | Unlimited | Unlimited |
Reward | Limited | Limited |
RATIO PUT WRITE Vs RATIO CALL WRITE - Strategy Pros & Cons
RATIO PUT WRITE | RATIO CALL WRITE | |
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Similar Strategies | Short Strangle and Short Straddle | Variable Ratio Write |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • Potential loss is higher than gain. • Limited profit. |
Advantages |