Compare Strategies:

Bull Put Spread Vs Long Call Butterfly Options Trading Strategy Comparison

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

Bull Put Spread Vs Long Call Butterfly

  Bull Put Spread Long Call Butterfly
Bull Put Spread Logo Long Call Butterfly Logo
About Strategy A Bull Put Spread (or Bull Put Credit Spread) strategy is a Bullish strategy to be used when you're expecting the price of the underlying instrument to mildly rise or be less volatile. The strategy involves buying a Put Option and selling a Put Option at different strike prices. The risk and reward for this strategy is limited. A Bull Put Strategy involves Buy OTM Put Option and Sell ITM Put Option. For example, If you are of the view that the price of Reliance Shares will moderately gain or drop its volatility in near future. If Reliance is currently trading at Rs 600 then you will buy an OTM Put Option at Rs 700 and a sell an ITM Put Option at Rs 550. You will make a profit when, at expiry, Reliance closes at Rs 700 level and incur losse... 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 Bullish 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 short put - net premium paid

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

  Bull Put Spread Long Call Butterfly
When to use?

This strategy works well when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.

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

Market View Bullish
When you are expecting a moderate rise in the price of the underlying or less volatility.
Neutral

Neutral on the underlying asset and bearish on the volatility.

Action
  • Buy OTM Put Option
  • Sell ITM Put Option

A Bull Put Strategy involves Buy OTM Put Option + Sell ITM Put Option.

For example, If you are of the view that the price of Reliance Shares will moderately gain or drop its volatility in near future. If Reliance is currently trading at 600 then you will buy a OTM PUT OPTION at 700 and a sell a ITM PUT OPTION at 550. You will make a profit when at expiry Reliance closes at 700 level and incur losses if the prices fall down below the current price.

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

Breakeven Point Strike price of short put - net premium paid

Upper Breakeven = Higher Strike Price - Net Premium

Lower Breakeven = Lower Strike Price + Net Premium

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

  Bull Put Spread Long Call Butterfly
Risks Limited

Maximum loss occurs when the stock price moves below the lower strike price on expiration date.

Max Loss = (Strike Price Put 1 - Strike Price of Put 2) - Net Premium Received

Max Loss Occurs When Price of Underlying <= Strike Price of Long Put

Limited

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

Rewards Limited

Maximum profit happens when the price of the underlying moves above the strike price of Short Put on expiration date.

Max Profit = Net Premium Received

Limited

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

Maximum Profit Scenario

Both options unexercised

Only ITM Call exercised

Maximum Loss Scenario

Both options exercised

All options exercised or all options not exercised.

Pros & Cons or Bull Put Spread and Long Call Butterfly

  Bull Put Spread Long Call Butterfly
Advantages

Allows you to benefit from time decay in profit situations. Helps you profit from 3 scenarios: rise, sideway movements and marginal fall of the underlying.

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

Disadvantage

Limited profit. Time decay may go against you in loss situations.

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

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







Search Chittorgarh.com:

Download Our Mobile App

Android App iOS App