When Should You Use This Strategy?
Bullish but want upside financed; put vol > call vol
Who Benefits Most?
Bullish traders with conviction
Position Setup
The Bullish Risk Reversal consists of the following legs:
- Sell 195 strike put at $3 premium
- Buy 1105 strike call at $3 premium
How Profit and Loss Work
Maximum Profit: Unlimited: (Stock price − Call strike) − Net premium
Maximum Loss: Limited: (Put strike − Stock price) + Net premium
Break-even Points: Put strike + Net premium
Timing & Time Horizon
30–90 days
Most traders enter this strategy 30–60 days before their expected move, allowing enough time for the position to develop while avoiding excessive time decay on shorter-dated options.
Capital Requirements
Often generates credit
How to Manage the Position
Close at 50% max profit
- Monitor the position daily, especially as it approaches profitability
- Set clear profit targets and exit rules before entering
- Consider closing early to lock in gains rather than waiting for max profit
- Be prepared to cut losses if the thesis is wrong
Key Risks & What to Watch
- Assignment on short put forces stock purchase
- Loss significant if stock crashes
Model Before You Trade
Every strategy performs differently based on entry price, strike selection, and premium levels. Use the interactive Bullish Risk Reversal calculator to model the payoff with your expected entry, strikes, and premiums before committing capital.
Educational information only. This guide explains how the strategy works mathematically and typically behaves. It is not investment advice, and past performance does not guarantee future results. Options trading involves significant risk, including the potential loss of premium paid. Paper trade or use small positions while learning.