Compare Strategies
STRAP | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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About Strategy |
Strap Option StrategyStrap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin |
Christmas Tree Spread with Puts Option StrategyThis Strategy is an advance option strategy that consists of three legs and six total options. In this strategy buying one put at strike price D, skipping strike price C, writes three calls at strike price B, and buying two calls at strike price A for same expiration dates for neutral to bearish forecast. An investor used this strategy to potential returns .. |
STRAP Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Details
STRAP | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 3 | 6 |
Strategy Level | Beginners | Advance |
Reward Profile | Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid | Limited |
Risk Profile | Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts | Limited |
Breakeven Point | Strike Price of Calls/Puts + (Net Premium Paid/2) | Lowest strike prices + the half premium – premium paid |
STRAP Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - When & How to use ?
STRAP | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Market View | Neutral | Bearish |
When to use? | This strategy is used when the investor is bullish on the stock and expects volatility in the near future. | This Strategy is used when an investor wants potential returns. |
Action | Buy 2 ATM Call Option, Buy 1 ATM Put Option | Buying one ATM, Selling 3 Puts, Buying one more OTM Put |
Breakeven Point | Strike Price of Calls/Puts + (Net Premium Paid/2) | Lowest strike prices + the half premium – premium paid |
STRAP Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Risk & Reward
STRAP | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Maximum Profit Scenario | UNLIMITED | Equal middle strike price – higher strike price – the premium |
Maximum Loss Scenario | Net Premium Paid | Net Debit paid for the strategy. |
Risk | Limited | Limited |
Reward | Unlimited | Limited |
STRAP Vs CHRISTMAS TREE SPREAD WITH PUT OPTION - Strategy Pros & Cons
STRAP | CHRISTMAS TREE SPREAD WITH PUT OPTION | |
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Similar Strategies | Strip, Short Put Ladder, Short Call Ladder | Butterfly spreads |
Disadvantage | • To generate profit, there should be significant change in share price. • Expensive strategy. | • Potential profit is lower or limited. |
Advantages | • Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially. | • The potential of loss is limited. |