Bear Put Spread Vs Short Strangle (Sell Strangle) Options Trading Strategy Comparison

Compare Bear Put Spread and Short Strangle (Sell Strangle) options trading strategies. Find similarities and differences between Bear Put Spread and Short Strangle (Sell Strangle) strategies. Find the best options trading strategy for your trading needs.

Bear Put Spread Vs Short Strangle (Sell Strangle)

	Bear Put Spread	Short Strangle (Sell Strangle)


About Strategy	The Bear Put strategy involves selling a Put Option while simultaneously buying a Put option. Contrary to Bear Call Spread, here you pay the higher premium and receive the lower premium. So there is a net debit in premium. Your risk is capped at the difference in premiums while your profit will be limited to the difference in strike prices of Put Option minus net premiums. This strategy is used when the trader believes that the price of underlying asset will go down moderately. This strategy is also known as the bear put debit spread as a net debit is taken upon entering the trade. This strategy has a limited risk as well as limited rewards. How to use the bear put spread options strategy? The bear put spread strategy looks like... Read More	The Short Strangle (or Sell Strangle) is a neutral strategy wherein a Slightly OTM Call and a Slightly OTM Put Options are sold simultaneously of same underlying asset and expiry date. This strategy can be used when the trader expects that the underlying stock will experience a very little volatility in the near term. It is a limited profit and unlimited risk strategy. The maximum profit earn is the net premium received. The maximum loss is achieved when the underlying moves either significantly upwards or downwards at expiration. A net credit is taken to enter into this strategy. For this reason, the Short Strangles are Credit Spreads. The usual Short Strangle Strategy looks like as below for NIFTY current index value at 10400 (NIFTY S... Read More
Market View	Bearish	Neutral
Strategy Level	Advance	Advance
Options Type	Put	Call + Put
Number of Positions	2	2
Risk Profile	Limited	Unlimited
Reward Profile	Limited	Limited
Breakeven Point	Strike Price of Long Put - Net Premium	two break-even points

When and how to use Bear Put Spread and Short Strangle (Sell Strangle)?

	Bear Put Spread	Short Strangle (Sell Strangle)
When to use?	The bear call spread options strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.	The Short Strangle is perfect in a neutral market scenario when the underlying is expected to be less volatile.
Market View	Bearish When you are expecting the price of the underlying to moderately drop.	Neutral When you are expecting little volatility and movement in the price of the underlying.
Action	Buy ITM Put Option Sell OTM Put Option	Sell OTM Call Sell OTM Put Sell 1 out-of-the-money put and sell 1 out-of-the-money call which belongs to same underlying asset and has the same expiry date.
Breakeven Point	Strike Price of Long Put - Net Premium The breakeven point is achieved when the price of the underlying is equal to strike price of long Put minus net premium.	two break-even points A strangle has two break-even points. Lower Break-even = Strike Price of Put - Net Premium Upper Break-even = Strike Price of Call+ Net Premium"

Compare Risks and Rewards (Bear Put Spread Vs Short Strangle (Sell Strangle))

	Bear Put Spread	Short Strangle (Sell Strangle)
Risks	Limited The maximum loss is limited to net premium paid. It occurs when the price of the underlying is less than strike price of long Put.. Max Loss = Net Premium Paid.	Unlimited The maximum loss is unlimited in this strategy. You will incur losses when the price of the underlying moves significantly either upwards or downwards at expiration. Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received Or Loss = Strike Price of Short Put - Price of Underlying - Net Premium Received
Rewards	Limited The maximum profit is achieved when the strike price of short Put is greater than the price of the underlying.. Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid.	Limited For maximum profit, the price of the underlying on expiration date must trade between the strike prices of the options. The maximum profit is limited to the net premium received while selling the Options. Maximum Profit = Net Premium Received
Maximum Profit Scenario	Underlying goes down and both options exercised	Both Option not exercised
Maximum Loss Scenario	Underlying goes up and both options not exercised	One Option exercised

Pros & Cons or Bear Put Spread and Short Strangle (Sell Strangle)

	Bear Put Spread	Short Strangle (Sell Strangle)
Advantages	Risk is limited. It reduces the cost of investment.	The strategy offers higher chance of profitability in comparison to Short Straddle due to selling of OTM Options.
Disadvantage	The profit is limited.	Limited reward with high risk exposure.
Simillar Strategies	Bear Call Spread, Bull Call Spread	Short Straddle, Long Strangle

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