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 Call 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 Call 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 Call Spread Vs Long Call Butterfly comparison:
Bull Call Spread is a vertical options strategy that involves buying and selling two option contracts simultaneously, both with the same underlying security and expiry, but different strike prices...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
It involves buying and selling two option contracts simultaneously, both with the same underlying security and expiry, but different strike prices.
Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations.
Market Position
Moderately Bullish
Neutral
Strategy Level Suitable for
Beginners
Intermediates
Options Traded
Call
Call
Number of Positions
2
4
Action Needed
1 ATM Call, 1 OTM Call
2 ATM, 1 ITM, 1 OTM Calls
Risk for You
Limited
Limited
Profit Potential
Limited
Limited
Break Even Point for Investor
Strike price of Purchased Call + 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 on Bull Call Spread Vs Long Call Butterfly option strategies.
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.
The profit you get using this strategy is also limited in scope.
If you are in a moderately bullish market set-up and have a limited market risk appetite then you make consider using the Bull Call Spread strategy in your trades.
To add to that, 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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