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Comparision (BULL CALL SPREAD VS SHORT STRADDLE)

 

Compare Strategies

  BULL CALL SPREAD SHORT STRADDLE
About Strategy

Bull Call Spread Option Strategy

Bull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date.

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..

BULL CALL SPREAD Vs SHORT STRADDLE - Details

BULL CALL SPREAD SHORT STRADDLE
Market View Bullish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 2 2
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike price of purchased call + net premium paid Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

BULL CALL SPREAD Vs SHORT STRADDLE - When & How to use ?

BULL CALL SPREAD SHORT STRADDLE
Market View Bullish Neutral
When to use? This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Buy ITM Call Option, Sell OTM Call Option Sell Call Option, Sell Put Option
Breakeven Point Strike price of purchased call + net premium paid Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

BULL CALL SPREAD Vs SHORT STRADDLE - Risk & Reward

BULL CALL SPREAD SHORT STRADDLE
Maximum Profit Scenario (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Net Premium Paid Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Limited Unlimited
Reward Limited Limited

BULL CALL SPREAD Vs SHORT STRADDLE - Strategy Pros & Cons

BULL CALL SPREAD SHORT STRADDLE
Similar Strategies Collar Short Strangle
Disadvantage • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

BULL CALL SPREAD

SHORT STRADDLE