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Bear Put Spread Vs Long Straddle (Buy Straddle) Options Trading Strategy Comparison

Compare Bear Put Spread and Long Straddle (Buy Straddle) options trading strategies. Find similarities and differences between Bear Put Spread and Long Straddle (Buy Straddle) strategies. Find the best options trading strategy for your trading needs.

Bear Put Spread Vs Long Straddle (Buy Straddle)

  Bear Put Spread Long Straddle (Buy Straddle)
Bear Put Spread Logo Long Straddle (Buy Straddle) 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 The Long Straddle (or Buy Straddle) is a neutral strategy. This strategy involves simultaneously buying a call and a put option of the same underlying asset, same strike price and same expire date. A Long Straddle strategy is used in case of highly volatile market scenarios wherein you expect a big movement in the price of the underlying but are not sure of the direction. Such scenarios arise when company declare results, budget, war-like situation etc. This is an unlimited profit and limited risk strategy. The profit earns in this strategy is unlimited. Higher volatility results in higher profits. The maximum loss is limited to the net premium paid. The max loss occurs when underlying asset price on expire remains at the strike price. ... Read More
Market View Bearish Neutral
Strategy Level Advance Beginners
Options Type Put Call + Put
Number of Positions 2 2
Risk Profile Limited Limited
Reward Profile Limited Unlimited
Breakeven Point Strike Price of Long Put - Net Premium 2 break-even points

When and how to use Bear Put Spread and Long Straddle (Buy Straddle)?

  Bear Put Spread Long Straddle (Buy Straddle)
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.

The strategy is perfect to use when there is market volatility expected due to results, elections, budget, policy change, war etc.

Market View Bearish

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

Neutral

When you are not sure on the direction the underlying would move but are expecting the rise in its volatility.

Action
  • Buy ITM Put Option
  • Sell OTM Put Option

  • Buy Call Option
  • Buy Put Option

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.

2 break-even points

A straddle has two break-even points.

Lower Breakeven = Strike Price of Put - Net Premium

Upper breakeven = Strike Price of Call + Net Premium

Compare Risks and Rewards (Bear Put Spread Vs Long Straddle (Buy Straddle))

  Bear Put Spread Long Straddle (Buy Straddle)
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

The maximum loss for long straddle strategy is limited to the net premium paid. It happens the price of underlying is equal to strike price of options.

Maximum Loss = 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.

Unlimited

There is unlimited profit opportunity in this strategy irrespective of the direction of the underlying. Profit occurs when the price of the underlying is greater than strike price of long Put or lesser than strike price of long Call.

Maximum Profit Scenario

Underlying goes down and both options exercised

Max profit is achieved when at one option is exercised.

Maximum Loss Scenario

Underlying goes up and both options not exercised

When both options are not exercised. This happens when underlying asset price on expire remains at the strike price.

Pros & Cons or Bear Put Spread and Long Straddle (Buy Straddle)

  Bear Put Spread Long Straddle (Buy Straddle)
Advantages

Risk is limited. It reduces the cost of investment.

Earns you unlimited profit in a volatile market while minimizing the loss.

Disadvantage

The profit is limited.

The price change has to be bigger to make good profits.

Simillar Strategies Bear Call Spread, Bull Call Spread Long Strangle, Short Straddle