Bought Strangles – Trade Analysis Checklist

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  1. Low volatility expected to increase.
  2. Break out expected either technically or fundamentally.
  3. Breakevens are realistic.
  4. % Cost of trade is not too high.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 07 5504 2244 or info@totaloptions.com.au

Bull Call Spread: Trade Analysis – Risk vs. Reward

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Trade Analysis

Analysing your trade is essential before placing the trade. You need to max sure you have the necessary detail and go through the following checklist:

  1. Stock Selection: Double check your analysis on the stock and make sure you share price target for the bull call spread is realistic.
  2. Determine entry cost, most important as it is also your maximum loss.
  3. Determine max profit and check that it is realistic.
  4. Make sure you have a good risk vs. reward.

Risk vs. Reward

The risk vs. reward of a trade should be calculated before placing the trade. The risk vs. reward ratio is the amount you are risking relative to the potential profit. For instance if you are risking $100 to make $200 profit then the risk vs. reward is risking 1 to make 2 (risk vs. reward 1:2). A bull call spread should have a risk vs. reward of 1:1.5 or greater. You should aim for a risk reward around 1:2. This means that you need to have a 33% success rate to be a successful trader. It also helps with your risk management by allocating a risk level per trade and a maximum profit level to take profits.


To receive ASX Option Recommendations or to learn more about Bull Call Spread, Bull Put Spread, Bear Call Spread, Bear Put Spread Strategies please request the Option Spreads eBook by contacting us on 07 5504 2244 or info@totaloptions.com.au