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Comparision (RATIO CALL WRITE VS MARRIED PUT )

 

Compare Strategies

  RATIO CALL WRITE MARRIED PUT
About Strategy

Ratio Call Write Option Strategy 

This 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.

Married Put Option Strategy

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 ..

RATIO CALL WRITE Vs MARRIED PUT - Details

RATIO CALL WRITE MARRIED PUT
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 1
Strategy Level Beginners Beginners
Reward Profile Limited Unlimited
Risk Profile Unlimited Limited
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit Purchase Price of Underlying + Premium Paid

RATIO CALL WRITE Vs MARRIED PUT - When & How to use ?

RATIO CALL WRITE MARRIED PUT
Market View Neutral Bullish
When to use? This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. This Strategy work when the investor goes long in any stock. He expects the rise in market in future.
Action Sell 2 ATM Calls Buy 250 XYZ Shares, Buy 1 ATM Put Option
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit Purchase Price of Underlying + Premium Paid

RATIO CALL WRITE Vs MARRIED PUT - Risk & Reward

RATIO CALL WRITE MARRIED PUT
Maximum Profit Scenario Net Premium Received - Commissions Paid Profit = Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid Max Loss = Premium Paid + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

RATIO CALL WRITE Vs MARRIED PUT - Strategy Pros & Cons

RATIO CALL WRITE MARRIED PUT
Similar Strategies Variable Ratio Write Long Call
Disadvantage • Potential loss is higher than gain. • Limited profit. Cost of the put options eats into profit margin.
Advantages Unlimited Profit and Limited Risk

RATIO CALL WRITE

MARRIED PUT