Compare Strategies
| LONG CALL LADDER | STOCK REPAIR | |
|---|---|---|
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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. |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has .. |
LONG CALL LADDER Vs STOCK REPAIR - Details
| LONG CALL LADDER | STOCK REPAIR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 3 |
| 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 |
LONG CALL LADDER Vs STOCK REPAIR - When & How to use ?
| LONG CALL LADDER | STOCK REPAIR | |
|---|---|---|
| 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. | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buy 1 ATM Call, Sell 2 OTM Calls |
| 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 |
LONG CALL LADDER Vs STOCK REPAIR - Risk & Reward
| LONG CALL LADDER | STOCK REPAIR | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Unlimited |
LONG CALL LADDER Vs STOCK REPAIR - Strategy Pros & Cons
| LONG CALL LADDER | STOCK REPAIR | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | |
| Disadvantage | • Unlimited risk. • Margin required. | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. |