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Comparision (SHORT STRADDLE VS SHORT CALL LADDER)

 

Compare Strategies

  SHORT STRADDLE SHORT CALL 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 Call Ladder Option Strategy 

This strategy is implemented when a trader is moderately bullish on the market, and volatility. It involves sale of an ITM Call Option, buying of an ATM Call Option & OTM Call Option. The risk associated with the strategy is limited.

SHORT STRADDLE Vs SHORT CALL LADDER - Details

SHORT STRADDLE SHORT 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 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 = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

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

SHORT STRADDLE SHORT CALL 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 moderately bullish on the market, and volatility
Action Sell Call Option, Sell Put Option Sell 1 ITM Call, Buy 1 ATM Call, Buy 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 Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

SHORT STRADDLE Vs SHORT CALL LADDER - Risk & Reward

SHORT STRADDLE SHORT CALL LADDER
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

SHORT STRADDLE Vs SHORT CALL LADDER - Strategy Pros & Cons

SHORT STRADDLE SHORT CALL LADDER
Similar Strategies Short Strangle Short Put Ladder, Strip, Strap
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • Unlimited risk. • 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 . • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss.

SHORT STRADDLE

SHORT CALL LADDER