Bull Put Spread Vs Long Call Butterfly Options Trading Strategy Comparison

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

Bull Put Spread Vs Long Call Butterfly

	Bull Put Spread	Long Call Butterfly


About Strategy	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	Long Call Butterfly is a neutral strategy where very low volatility in the price of underlying is expected. The strategy is a combination of bull Spread and bear Spread. It involves Buy 1 ITM Call, Sell 2 ATM Calls and Buy 1 OTM Call. The strike prices of all Options should be at equal distance from the current price. Suppose Nifty is currently trading at 10400. You expect very little volatility in it. You can implement the Long Call Butterfly by buying 1 ITM Call Option at 10300, selling 2 ATM Nifty Call Options at 10400, buying 1 OTM Call Option at 10500. Ensure that strike prices of Options are at equidistance. Your loss will be limited to the net premium paid on 4 positions while profit will be limited to strike price of short calls.... Read More
Market View	Bullish	Neutral
Strategy Level	Advance	Advance
Options Type	Put	Call
Number of Positions	2	4
Risk Profile	Limited	Limited
Reward Profile	Limited	Limited
Breakeven Point	Strike price of short put - net premium paid

When and how to use Bull Put Spread and Long Call Butterfly?

	Bull Put Spread	Long Call Butterfly
When to use?	This strategy works well when you're of the view that the price of a particular underlying will rise, move sideways, or marginally fall.	This strategy should be used when you're expecting no volatility in the price of the underlying.
Market View	Bullish When you are expecting a moderate rise in the price of the underlying or less volatility.	Neutral Neutral on the underlying asset and bearish on the volatility.
Action	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.	Sell 2 ATM Call Buy 1 ITM Call Buy 1 OTM Call
Breakeven Point	Strike price of short put - net premium paid	Upper Breakeven = Higher Strike Price - Net Premium Lower Breakeven = Lower Strike Price + Net Premium

Compare Risks and Rewards (Bull Put Spread Vs Long Call Butterfly)

	Bull Put Spread	Long Call Butterfly
Risks	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	Limited Risk in the Long Call Butterfly options strategy is limited to the net premium paid.
Rewards	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	Limited Rewards in the Long Call Butterfly options strategy is limited to the adjacent strikes minus net premium debit.
Maximum Profit Scenario	Both options unexercised	Only ITM Call exercised
Maximum Loss Scenario	Both options exercised	All options exercised or all options not exercised.

Pros & Cons or Bull Put Spread and Long Call Butterfly

	Bull Put Spread	Long Call Butterfly
Advantages	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.	Profit earning strategy with limited risk in a less volatile market.
Disadvantage	Limited profit. Time decay may go against you in loss situations.	Premiums and brokerage paid on multiple position may eat your profits.
Simillar Strategies	Bull Call Spread, Bear Put Spread, Collar

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