Compare Strategies
| BULL CALL SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
|
|
|
| About Strategy |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. |
Diagonal Bear Put SpreadWhen the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset. This strategy bags limited rewards with limited risk. |
BULL CALL SPREAD Vs DIAGONAL BEAR PUT SPREAD - Details
| BULL CALL SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| Type (CE/PE) | CE (Call Option) | PE (Put Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Limited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike price of purchased call + net premium paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL CALL SPREAD Vs DIAGONAL BEAR PUT SPREAD - When & How to use ?
| BULL CALL SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| When to use? | This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. | When the trader is neutral – bearish in the near-month and bearish in the mid-month, he will apply Diagonal Bear Put Spread. This strategy involves buying Mid-Month ITM Put Options and selling (short/write) equal number of Near-Month OTM Put Options, of the same underlying asset |
| Action | Buy ITM Call Option, Sell OTM Call Option | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option |
| Breakeven Point | Strike price of purchased call + net premium paid | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL CALL SPREAD Vs DIAGONAL BEAR PUT SPREAD - Risk & Reward
| BULL CALL SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Maximum Profit Scenario | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month |
| Maximum Loss Scenario | Net Premium Paid | When the stock trades up above the long-term put strike price. |
| Risk | Limited | Limited |
| Reward | Limited | Limited |
BULL CALL SPREAD Vs DIAGONAL BEAR PUT SPREAD - Strategy Pros & Cons
| BULL CALL SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Similar Strategies | Collar | Bear Put Spread and Bear Call Spread |
| Disadvantage | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. |
| Advantages | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. | The Risk is limited. |