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Comparision (SHORT PUT VS LONG CALL LADDER)

 

Compare Strategies

  SHORT PUT LONG CALL LADDER
About Strategy

Short Put Option Strategy

A 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 Option Strategy 

Long 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 Vs LONG CALL LADDER - Details

SHORT PUT LONG CALL LADDER
Market View Bullish Neutral
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 1 3
Strategy Level Beginners Advance
Reward Profile Limited Unlimited
Risk Profile Unlimited Unlimited
Breakeven Point Strike Price - Premium 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

SHORT PUT Vs LONG CALL LADDER - When & How to use ?

SHORT PUT LONG CALL LADDER
Market View Bullish Neutral
When to use? This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. 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 Sell Put Option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Strike Price - Premium 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

SHORT PUT Vs LONG CALL LADDER - Risk & Reward

SHORT PUT LONG CALL LADDER
Maximum Profit Scenario Premium received in your account when you sell the Put Option. Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Unlimited (When the price of the underlying falls.) Price of Underlying - Upper Breakeven Price + Commissions Paid
Risk Unlimited Unlimited
Reward Limited Unlimited

SHORT PUT Vs LONG CALL LADDER - Strategy Pros & Cons

SHORT PUT LONG CALL LADDER
Similar Strategies Bull Put Spread, Short Starddle Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. • Unlimited risk. • Margin required.
Advantages • 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. • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

SHORT PUT

LONG CALL LADDER