Compare Strategies
LONG CALL LADDER | SHORT PUT | |
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About Strategy |
Long Call Ladder Option StrategyLong Call Ladder Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. It involves buying of an ITM Call Option and sale of 1 ATM & 1 OTM Call Options. However, the risk associated with this strategy is unlimited and reward is limited. |
Short Put Option StrategyA trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level. Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put. |
LONG CALL LADDER Vs SHORT PUT - Details
LONG CALL LADDER | SHORT PUT | |
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Market View | Neutral | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 3 | 1 |
Strategy Level | Advance | Beginners |
Reward Profile | Unlimited | Limited |
Risk Profile | Unlimited | Unlimited |
Breakeven Point | Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid | Strike Price - Premium |
LONG CALL LADDER Vs SHORT PUT - When & How to use ?
LONG CALL LADDER | SHORT PUT | |
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Market View | Neutral | Bullish |
When to use? | This Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. | This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. |
Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Sell Put Option |
Breakeven Point | Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid | Strike Price - Premium |
LONG CALL LADDER Vs SHORT PUT - Risk & Reward
LONG CALL LADDER | SHORT PUT | |
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Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Premium received in your account when you sell the Put Option. |
Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Unlimited (When the price of the underlying falls.) |
Risk | Unlimited | Unlimited |
Reward | Unlimited | Limited |
LONG CALL LADDER Vs SHORT PUT - Strategy Pros & Cons
LONG CALL LADDER | SHORT PUT | |
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Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Bull Put Spread, Short Starddle |
Disadvantage | • Unlimited risk. • Margin required. | • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. |
Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account. |