Compare Strategies
| BULL CALENDER SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
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| About Strategy |
Bull Calendar Spread Option StrategyThis strategy is implemented when a trader is bullish on the underlying stock/index in the short term say 2 months or so. A trader will write one Near Month OTM Call Option and buy one next Month OTM Call Option, thereby reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when a trader wants to make prof |
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 CALENDER SPREAD Vs DIAGONAL BEAR PUT SPREAD - Details
| BULL CALENDER SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| Type (CE/PE) | CE (Call Option) + PE (Put Option) | PE (Put Option) |
| Number Of Positions | 2 | 2 |
| Strategy Level | Beginners | Beginners |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Stock Price when long call value is equal to net debit. | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL CALENDER SPREAD Vs DIAGONAL BEAR PUT SPREAD - When & How to use ?
| BULL CALENDER SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Market View | Bullish | Bearish |
| When to use? | This strategy is used when a trader wants to make profit from a steady increase in the stock price over a short period of time. | 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 | Sell 1 Near-Term OTM Call, Buy 1 Long-Term OTM Call | Sell 1 Near-Month OTM Put Option, Buy 1 Mid-Month ITM Put Option |
| Breakeven Point | Stock Price when long call value is equal to net debit. | This is a dynamic trade with many possible scenarios and future trades, it is impossible to calculate a breakeven. |
BULL CALENDER SPREAD Vs DIAGONAL BEAR PUT SPREAD - Risk & Reward
| BULL CALENDER SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Maximum Profit Scenario | You have unlimited profit potential to the upside. | 'Premiums received - Initial premium to execute + Strike price - Stock Price on final month |
| Maximum Loss Scenario | Max Loss = Premium Paid + Commissions Paid | When the stock trades up above the long-term put strike price. |
| Risk | Limited | Limited |
| Reward | Unlimited | Limited |
BULL CALENDER SPREAD Vs DIAGONAL BEAR PUT SPREAD - Strategy Pros & Cons
| BULL CALENDER SPREAD | DIAGONAL BEAR PUT SPREAD | |
|---|---|---|
| Similar Strategies | The Collar, Bull Put Spread | Bear Put Spread and Bear Call Spread |
| Disadvantage | • Limited profit even if underlying asset rallies. • If the short call options are assigned when the underlying asset rallies then losses can be sustained. | Higher commissions due to additional trades. , Changes maximum profit potential of call or put spreads. |
| Advantages | • Limited losses to the net debit. • Enable trader to book profit even if underlying asset stays stagnant. • If the market trends reverse, cashing in from stock price movement at limited risk. | The Risk is limited. |