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Comparision (SHORT STRADDLE VS SHORT PUT LADDER)

 

Compare Strategies

  SHORT STRADDLE SHORT PUT LADDER
About Strategy

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an

Short Put Ladder Option Strategy 

This strategy is implemented when a trader is slightly bearish on the market. A trader is required to be bullish over the volatility in the market. It involves sale of an ITM Put Option and buying of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is limited.

SHORT STRADDLE Vs SHORT PUT LADDER - Details

SHORT STRADDLE SHORT PUT LADDER
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) PE (Put Option)
Number Of Positions 2 3
Strategy Level Advance Advance
Reward Profile Limited Unlimited
Risk Profile Unlimited Limited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received

SHORT STRADDLE Vs SHORT PUT LADDER - When & How to use ?

SHORT STRADDLE SHORT PUT LADDER
Market View Neutral Neutral
When to use? This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset. This strategy is implemented when a trader is slightly bearish on the market.
Action Sell Call Option, Sell Put Option Sell ITM Put Option, Buying 1 ATM & 1 OTM Put Option.
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received

SHORT STRADDLE Vs SHORT PUT LADDER - Risk & Reward

SHORT STRADDLE SHORT PUT LADDER
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid When Price of Underlying < Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Strike Price of Short Put - Strike Price of Higher Strike Long Put - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

SHORT STRADDLE Vs SHORT PUT LADDER - Strategy Pros & Cons

SHORT STRADDLE SHORT PUT LADDER
Similar Strategies Short Strangle Strap, Strip
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • Best to use when you are confident about movement of market. • Small margin required.
Advantages • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option . • When there is surge in implied volatility, this strategy can give more profit. • Unlimited downside profit. • Limited risk and unlimited reward strategy.

SHORT STRADDLE

SHORT PUT LADDER