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Comparision (LONG STRADDLE VS LONG CALL LADDER)

 

Compare Strategies

  LONG STRADDLE LONG CALL LADDER
About Strategy

Long Straddle Option Strategy 

Straddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc

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.

LONG STRADDLE Vs LONG CALL LADDER - Details

LONG STRADDLE LONG CALL LADDER
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Unlimited Unlimited
Risk Profile Limited Unlimited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net 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

LONG STRADDLE Vs LONG CALL LADDER - When & How to use ?

LONG STRADDLE LONG CALL LADDER
Market View Neutral Neutral
When to use? This options strategy is work well when and investor market view is bearish. 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 Call Option, Buy Put Option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net 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

LONG STRADDLE Vs LONG CALL LADDER - Risk & Reward

LONG STRADDLE LONG CALL LADDER
Maximum Profit Scenario Max profit is achieved when at one option is exercised. Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Maximum Loss = Net Premium Paid Price of Underlying - Upper Breakeven Price + Commissions Paid
Risk Limited Unlimited
Reward Unlimited Unlimited

LONG STRADDLE Vs LONG CALL LADDER - Strategy Pros & Cons

LONG STRADDLE LONG CALL LADDER
Similar Strategies Bear Put Spread Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. • Unlimited risk. • Margin required.
Advantages • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

LONG STRADDLE

LONG CALL LADDER