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 Bull 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 Bull 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 Bull Put Spread Vs Long Call Butterfly comparison:
Bull Put Spread comes into play when the trader is expecting the market is going up gradually, but moderately. So, this is also suitable for a moderately bullish forecast, just like the bull call option...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
Bull put spread is more ideal if the there is very high volatility in the market, time to expiration date is more and the market has declined considerably.
Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations.
Market Position
Moderately Bullish
Neutral
Strategy Level Suitable for
Intermediates
Intermediates
Options Traded
Put
Call
Number of Positions
2
4
Action Needed
Buy OTM Put, Sell ITM 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 short put MINUS net premium paid
Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium
Investor Intention
Let Options Expire Worthlessly
Options expire worthless except the one with the lower strike price
Thus, with this, we wrap up our comparison of Bull Put Spread Vs Long Call Butterfly option strategies.
At the same time, if you are in a moderately bullish forecast situation and want to take a limited risk, then Bull Put Spread is one of the options trading strategies you can look out for.
The profit you get using this strategy is limited in scope.
However, 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.
Like Bull Put Spread, the profit you get using this strategy is also limited in scope.
Furthermore, as told above, it also depends on the market situation.
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