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Long Combo Vs Bull Put Spread Options Trading Strategy Comparison

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

Long Combo Vs Bull Put Spread

  Long Combo Bull Put Spread
Long Combo Logo Bull Put Spread Logo
About Strategy A long Combo strategy is a Bullish Trading Strategy employed when a trader is expecting the price of a stock, he is holding to move up. It involves selling an OTM Put and buying an OTM Call. The strategy requires less capital as the cost of Call Option is covered by premium received from Put Option. Say SBI shares are currently trading at Rs 500. You are bullish on it but doesn't want to invest or have capital to do it. You can use Long Combo strategy here by selling a Put option of SBI at strike price of Rs 400 and buying a Call Option at a strike price of Rs 600. You will earn premium on sell Put Option and pay premium on buying Call Option. you are investing less but will benefit if SBI shares rises as per your expectations. 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
Market View Bullish Bullish
Strategy Level Advance Advance
Options Type Call + Put Put
Number of Positions 2 2
Risk Profile Unlimited Limited
Reward Profile Unlimited Limited
Breakeven Point Call Strike + Net Premium Strike price of short put - net premium paid

When and how to use Long Combo and Bull Put Spread?

  Long Combo Bull Put Spread
When to use?

Long Combo strategy should be deployed when you're Bullish on an underlying but don't have the required capital or the risk appetite to invest directly into it.

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

Market View Bullish

When you are expecting the price of the underlying to move up in near future.

Bullish
When you are expecting a moderate rise in the price of the underlying or less volatility.
Action
  • Sell OTM Put Option
  • Buy OTM Call Option

  • 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.

Breakeven Point Call Strike + Net Premium
Strike price of short put - net premium paid

Compare Risks and Rewards (Long Combo Vs Bull Put Spread)

  Long Combo Bull Put Spread
Risks Unlimited

Long Combo is a high risk strategy. You will start losing money when the price of the underlying moves below the lower strike price. Your losses can be unlimited depending on how low the price of underlying falls.

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

Rewards Unlimited

Long Combo is a high return strategy. You will earn profits if the underlying moves above the higher price of the underlying. Your profit will depend on how high the price of the underlying moves.

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

Maximum Profit Scenario

Underlying goes up and Call option exercised

Both options unexercised

Maximum Loss Scenario

Underlying goes down and Put option exercised

Both options exercised

Pros & Cons or Long Combo and Bull Put Spread

  Long Combo Bull Put Spread
Advantages

Brings down the cost of investing in a Bullish stocks. And delivers high returns if prices move up.

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.

Disadvantage

Losses can be high if prices don't move as expected.

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

Simillar Strategies Bull Call Spread, Bear Put Spread, Collar