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Bear Put Spread Vs Long Call Butterfly Options Trading Strategy Comparison

Compare Bear Put Spread and Long Call Butterfly options trading strategies. Find similarities and differences between Bear Put Spread and Long Call Butterfly strategies. Find the best options trading strategy for your trading needs.

Bear Put Spread Vs Long Call Butterfly

  Bear Put Spread Long Call Butterfly
Bear Put Spread Logo Long Call Butterfly Logo
About Strategy The Bear Put strategy involves selling a Put Option while simultaneously buying a Put option. Contrary to Bear Call Spread, here you pay the higher premium and receive the lower premium. So there is a net debit in premium. Your risk is capped at the difference in premiums while your profit will be limited to the difference in strike prices of Put Option minus net premiums. This strategy is used when the trader believes that the price of underlying asset will go down moderately. This strategy is also known as the bear put debit spread as a net debit is taken upon entering the trade. This strategy has a limited risk as well as limited rewards. How to use the bear put spread options strategy? The bear put spread strategy looks like... Read More Long Call Butterfly is a neutral strategy where very low volatility in the price of underlying is expected. The strategy is a combination of bull Spread and bear Spread. It involves Buy 1 ITM Call, Sell 2 ATM Calls and Buy 1 OTM Call. The strike prices of all Options should be at equal distance from the current price. Suppose Nifty is currently trading at 10400. You expect very little volatility in it. You can implement the Long Call Butterfly by buying 1 ITM Call Option at 10300, selling 2 ATM Nifty Call Options at 10400, buying 1 OTM Call Option at 10500. Ensure that strike prices of Options are at equidistance. Your loss will be limited to the net premium paid on 4 positions while profit will be limited to strike price of short calls.... Read More
Market View Bearish Neutral
Strategy Level Advance Advance
Options Type Put Call
Number of Positions 2 4
Risk Profile Limited Limited
Reward Profile Limited Limited
Breakeven Point Strike Price of Long Put - Net Premium

When and how to use Bear Put Spread and Long Call Butterfly?

  Bear Put Spread Long Call Butterfly
When to use?

The bear call spread options strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.

This strategy should be used when you're expecting no volatility in the price of the underlying.

Market View Bearish

When you are expecting the price of the underlying to moderately drop.

Neutral

Neutral on the underlying asset and bearish on the volatility.

Action
  • Buy ITM Put Option
  • Sell OTM Put Option

  • Sell 2 ATM Call
  • Buy 1 ITM Call
  • Buy 1 OTM Call

Breakeven Point Strike Price of Long Put - Net Premium

The breakeven point is achieved when the price of the underlying is equal to strike price of long Put minus net premium.


Upper Breakeven = Higher Strike Price - Net Premium

Lower Breakeven = Lower Strike Price + Net Premium

Compare Risks and Rewards (Bear Put Spread Vs Long Call Butterfly)

  Bear Put Spread Long Call Butterfly
Risks Limited

The maximum loss is limited to net premium paid. It occurs when the price of the underlying is less than strike price of long Put..

Max Loss = Net Premium Paid.

Limited

Risk in the Long Call Butterfly options strategy is limited to the net premium paid.

Rewards Limited

The maximum profit is achieved when the strike price of short Put is greater than the price of the underlying..

Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid.

Limited

Rewards in the Long Call Butterfly options strategy is limited to the adjacent strikes minus net premium debit.

Maximum Profit Scenario

Underlying goes down and both options exercised

Only ITM Call exercised

Maximum Loss Scenario

Underlying goes up and both options not exercised

All options exercised or all options not exercised.

Pros & Cons or Bear Put Spread and Long Call Butterfly

  Bear Put Spread Long Call Butterfly
Advantages

Risk is limited. It reduces the cost of investment.

Profit earning strategy with limited risk in a less volatile market.

Disadvantage

The profit is limited.

Premiums and brokerage paid on multiple position may eat your profits.

Simillar Strategies Bear Call Spread, Bull Call Spread
Compare
Bear Put Spread Vs Long Call
Bear Put Spread Vs Short Call
Bear Put Spread Vs Long Put
Bear Put Spread Vs Short Put
Bear Put Spread Vs Bull Call Spread
Bear Put Spread Vs Bull Put Spread
Bear Put Spread Vs Synthetic Call
Bear Put Spread Vs Covered Call
Bear Put Spread Vs Long Combo
Bear Put Spread Vs Collar
Bear Put Spread Vs Bear Call Spread
Bear Put Spread Vs Protective Call
Bear Put Spread Vs Covered Put
Bear Put Spread Vs Long Straddle
Bear Put Spread Vs Short Straddle
Bear Put Spread Vs Long Strangle
Bear Put Spread Vs Short Strangle
Bear Put Spread Vs Short Call Butterfly
Bear Put Spread Vs Long Condor
Bear Put Spread Vs Short Condor
Bear Put Spread Vs Box Spread
Bear Put Spread Vs Short Box
Bear Put Spread Vs Covered Strangle
Long Call Butterfly Vs Long Call
Long Call Butterfly Vs Short Call
Long Call Butterfly Vs Long Put
Long Call Butterfly Vs Short Put
Long Call Butterfly Vs Bull Call Spread
Long Call Butterfly Vs Bull Put Spread
Long Call Butterfly Vs Synthetic Call
Long Call Butterfly Vs Covered Call
Long Call Butterfly Vs Long Combo
Long Call Butterfly Vs Collar
Long Call Butterfly Vs Bear Call Spread
Long Call Butterfly Vs Protective Call
Long Call Butterfly Vs Covered Put
Long Call Butterfly Vs Long Straddle
Long Call Butterfly Vs Short Straddle
Long Call Butterfly Vs Long Strangle
Long Call Butterfly Vs Short Strangle
Long Call Butterfly Vs Short Call Butterfly
Long Call Butterfly Vs Long Condor
Long Call Butterfly Vs Short Condor
Long Call Butterfly Vs Box Spread
Long Call Butterfly Vs Short Box
Long Call Butterfly Vs Covered Strangle







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