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Comparision (PUT BACKSPREAD VS LONG CALL)

 

Compare Strategies

  PUT BACKSPREAD LONG CALL
About Strategy

Put Backspread Option Strategy

If the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns.

Long Call Option Strategy

This is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.

PUT BACKSPREAD Vs LONG CALL - Details

PUT BACKSPREAD LONG CALL
Market View Bearish Bullish
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 2 1
Strategy Level Advance Beginner Level
Reward Profile Unlimited
Risk Profile Limited
Breakeven Point Strike Price + Premium

PUT BACKSPREAD Vs LONG CALL - When & How to use ?

PUT BACKSPREAD LONG CALL
Market View Bearish Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.)
When to use? This strategy work when an investor expect the underlying instrument move in upward direction.
Action Buying Call option
Breakeven Point Strike price + Premium

PUT BACKSPREAD Vs LONG CALL - Risk & Reward

PUT BACKSPREAD LONG CALL
Maximum Profit Scenario Underlying Asset close above from the strike price on expiry.
Maximum Loss Scenario Premium Paid
Risk Limited Limited
Reward Unlimited Unlimited

PUT BACKSPREAD Vs LONG CALL - Strategy Pros & Cons

PUT BACKSPREAD LONG CALL
Similar Strategies Protective Put
Disadvantage • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen.
Advantages • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock.

PUT BACKSPREAD

LONG CALL