When it comes to Options Trading, there are different complexities involved in terms of choosing a specific strategy that works the best for you.
At the same time, each strategy has its own set of advantages as well as limitations, thus making the concept of options trading even more challenging. Thus, in case you are looking to fit a particular strategy in your option trades, just check few areas before you make a choice.
In this detailed comparison of Bear Put Spread Vs Long Call Butterfly options trading strategies, we will be looking at the below-mentioned aspects and more:
Current Market Position
Your Risk Appetite
Your Trading Experience
Profit Potential
Intention and Expectation of a trader
Break-even point of your trade
Apart from the Bear Put Spread Vs Long Call Butterfly strategies, there are more than 25 comparisons of each of these strategies with other option strategies. With all these comparisons, you should be able to filter the ones that work the best for you.
Here is the detailed Bear Put Spread Vs Long Call Butterfly comparison:
Bear Put Spread is a type of vertical spread wherein buys a put option hoping to make a profit due to the market decline, and at the same time writes another put option with...more
Long Call Butterfly is the options trading strategy which is used when the trader has a neutral outlook towards the market and expects the prices to remain range-bound...more
Investor Obligation
If the prices fall as expected, the trader can make profits and limit his losses, but if the prices fall far more than expected then the trader won’t be able to make any profit.
Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations.
Market Position
Moderately Bearish
Neutral
Strategy Level Suitable for
Intermediates
Intermediates
Options Traded
Put
Call
Number of Positions
2
4
Action Needed
Buy ITM Put, Sell OTM Put
2 ATM, 1 ITM, 1 OTM Calls
Risk for You
Limited
Limited
Profit Potential
Limited
Limited
Break Even Point for Investor
Strike Price of Long Put MINUS Net Premium
Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium
Investor Intention
Let Put Options Expire Worthlessly
Options expire worthless except the one with the lower strike price
Thus, with this, we wrap up our comparison of Bear Put Spread Vs Long Call Butterfly option strategies.
At the same time, if you are in a neutral market situation and want to take a limited risk, then Long Call Butterfly is one of the options trading strategies you can look out for.
The profit you get using this strategy is also limited in scope.
At the same time, if you are looking to make some money from a market decline and can take some basic risk – then Bear Put Spread options strategy makes sense to you.
This needs to be known that the profit you get using both of these strategies is also limited in scope.
Furthermore, as told above, it also depends on the market situation.
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