Compare Strategies
| LONG CALL LADDER | PROTECTIVE CALL | |
|---|---|---|
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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. |
Protective Call Option StrategyThis strategy is simply the reversal of the Synthetic Call Strategy. This strategy is implemented when a trader is bearish on the market and expects to go down. Trader will short underlying stock in the cash market and buy either an ATM Call Option or OTM Call Option. The Call Option is bought to protect / hedge the upside risk on the short position. The .. |
LONG CALL LADDER Vs PROTECTIVE CALL - Details
| LONG CALL LADDER | PROTECTIVE CALL | |
|---|---|---|
| Market View | Neutral | Bearish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 1 |
| Strategy Level | Advance | Beginners |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Unlimited | Limited |
| 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 | Sale Price of Underlying + Premium Paid |
LONG CALL LADDER Vs PROTECTIVE CALL - When & How to use ?
| LONG CALL LADDER | PROTECTIVE CALL | |
|---|---|---|
| Market View | Neutral | Bearish |
| 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 is implemented when a trader is bearish on the market and expects to go down. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buy 1 ATM Call |
| 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 | Sale Price of Underlying + Premium Paid |
LONG CALL LADDER Vs PROTECTIVE CALL - Risk & Reward
| LONG CALL LADDER | PROTECTIVE CALL | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Sale Price of Underlying - Price of Underlying - Premium Paid |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Premium Paid + Call Strike Price - Sale Price of Underlying + Commissions Paid |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Unlimited |
LONG CALL LADDER Vs PROTECTIVE CALL - Strategy Pros & Cons
| LONG CALL LADDER | PROTECTIVE CALL | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Put Backspread, Long Put |
| Disadvantage | • Unlimited risk. • Margin required. | • Profitable when market moves as expected. • Not good for beginners. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Limited risk if the market moves in opposite direction as expected. • Allows you to keep open a profitable position to make further profits. • Unlimited profit potential. |