STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (RATIO PUT WRITE VS BULL PUT SPREAD)

 

Compare Strategies

  RATIO PUT WRITE BULL PUT SPREAD
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.

Bull Put Spread Option Strategy

Bull Put Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to move in an upward trend in the near future. This strategy includes buying of an ‘Out of the Money’ Put Option and selling of ‘In the Money’ Put Option of the same underlying asset and the same expiration date. When you write a Put, you will receive prem ..

RATIO PUT WRITE Vs BULL PUT SPREAD - Details

RATIO PUT WRITE BULL PUT SPREAD
Market View Neutral Bullish
Type (CE/PE) PE (Put Option) PE (Put Option)
Number Of Positions 2 2
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 Strike price of short put - net premium paid

RATIO PUT WRITE Vs BULL PUT SPREAD - When & How to use ?

RATIO PUT WRITE BULL PUT SPREAD
Market View Neutral Bullish
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 Bull Put Spread strategy is used when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.
Action Sell 2 ATM Puts Buy OTM Put Option, Sell ITM Put Option
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 Strike price of short put - net premium paid

RATIO PUT WRITE Vs BULL PUT SPREAD - Risk & Reward

RATIO PUT WRITE BULL PUT SPREAD
Maximum Profit Scenario Net Premium Received - Commissions Paid Max Profit = Net Premium Received
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 Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received
Risk Unlimited Limited
Reward Limited Limited

RATIO PUT WRITE Vs BULL PUT SPREAD - Strategy Pros & Cons

RATIO PUT WRITE BULL PUT SPREAD
Similar Strategies Short Strangle and Short Straddle Bull Call Spread, Bear Put Spread, Collar
Disadvantage • Potential loss is higher than gain. • Limited profit. • Limited profit potential. • In loss situations, time decay may go against you.
Advantages • Benefit from the time decay in profit positions but harmful in loss positions. • Profitable when underlying stock price rises, move sideways or marginal drop. • Reduce the downside risk.

RATIO PUT WRITE

BULL PUT SPREAD