Comparision ( BULL CALENDER SPREAD
VS MARRIED PUT )
Compare Strategies
BULL CALENDER SPREAD
MARRIED PUT
About Strategy
Bull Calendar Spread Option Strategy
This strategy is implemented when a trader is bullish on the underlying stock/index in the short term say 2 months or so. A trader will write one Near Month OTM Call Option and buy one next Month OTM Call Option, thereby reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when a trader wants to make prof
This strategy is applied when trader goes long on the underlying asset i.e. he buys the stock in cash market. He has a bullish view and expects the market to rise in the near future, but simultaneously has the fear of downward movement of the markets. In order to cover his position from vulnerabilities he buys one ATM Put Option of the same underlying asset. Here, a trader wi ..
Stock Price when long call value is equal to net debit.
Purchase Price of Underlying + Premium Paid
BULL CALENDER SPREAD Vs MARRIED PUT - Risk & Reward
BULL CALENDER SPREAD
MARRIED PUT
Maximum Profit Scenario
You have unlimited profit potential to the upside.
Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario
Max Loss = Premium Paid + Commissions Paid
Max Loss = Premium Paid + Commissions Paid
Risk
Limited
Limited
Reward
Unlimited
Unlimited
BULL CALENDER SPREAD Vs MARRIED PUT - Strategy Pros & Cons
BULL CALENDER SPREAD
MARRIED PUT
Similar Strategies
The Collar, Bull Put Spread
Long Call
Disadvantage
• Limited profit even if underlying asset rallies. • If the short call options are assigned when the underlying asset rallies then losses can be sustained.
Cost of the put options eats into profit margin.
Advantages
• Limited losses to the net debit. • Enable trader to book profit even if underlying asset stays stagnant. • If the market trends reverse, cashing in from stock price movement at limited risk.