Compare Strategies
BEAR CALL SPREAD | LONG CALL LADDER | |
---|---|---|
About Strategy |
Bear Call Spread Option StrategyBear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r |
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. |
BEAR CALL SPREAD Vs LONG CALL LADDER - Details
BEAR CALL SPREAD | LONG CALL LADDER | |
---|---|---|
Market View | Bearish | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Unlimited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price of Short Call + Net Premium Received | 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 |
BEAR CALL SPREAD Vs LONG CALL LADDER - When & How to use ?
BEAR CALL SPREAD | LONG CALL LADDER | |
---|---|---|
Market View | Bearish | Neutral |
When to use? | This 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. | 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. |
Action | Buy OTM Call Option, Sell ITM Call Option | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call |
Breakeven Point | Strike Price of Short Call + Net Premium Received | 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 |
BEAR CALL SPREAD Vs LONG CALL LADDER - Risk & Reward
BEAR CALL SPREAD | LONG CALL LADDER | |
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Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | Price of Underlying - Upper Breakeven Price + Commissions Paid |
Risk | Limited | Unlimited |
Reward | Limited | Unlimited |
BEAR CALL SPREAD Vs LONG CALL LADDER - Strategy Pros & Cons
BEAR CALL SPREAD | LONG CALL LADDER | |
---|---|---|
Similar Strategies | Bear Put Spread, Bull Call Spread | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | • Unlimited risk. • Margin required. |
Advantages | • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |