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Comparision (RATIO CALL WRITE VS RATIO CALL WRITE)

 

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  RATIO CALL WRITE RATIO CALL WRITE
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.

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.

RATIO CALL WRITE Vs RATIO CALL WRITE - Details

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

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

RATIO CALL WRITE RATIO CALL WRITE
Market View Neutral Neutral
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 is used by a trader who is neutral on the market and bearish on the volatility in the near future.
Action Sell 2 ATM Calls Sell 2 ATM Calls
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 Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

RATIO CALL WRITE Vs RATIO CALL WRITE - Risk & Reward

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

RATIO CALL WRITE Vs RATIO CALL WRITE - Strategy Pros & Cons

RATIO CALL WRITE RATIO CALL WRITE
Similar Strategies Variable Ratio Write Variable Ratio Write
Disadvantage • Potential loss is higher than gain. • Limited profit. • Potential loss is higher than gain. • Limited profit.
Advantages

RATIO CALL WRITE

RATIO CALL WRITE