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Comparision (SHORT PUT LADDER VS SHORT STRADDLE)

 

Compare Strategies

  SHORT PUT LADDER SHORT STRADDLE
About Strategy

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 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 Vs SHORT STRADDLE - Details

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

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

SHORT PUT LADDER SHORT STRADDLE
Market View Neutral Neutral
When to use? This strategy is implemented when a trader is slightly bearish on the market. 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.
Action Sell ITM Put Option, Buying 1 ATM & 1 OTM Put Option. Sell Call Option, Sell Put Option
Breakeven Point 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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT PUT LADDER Vs SHORT STRADDLE - Risk & Reward

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

SHORT PUT LADDER Vs SHORT STRADDLE - Strategy Pros & Cons

SHORT PUT LADDER SHORT STRADDLE
Similar Strategies Strap, Strip Short Strangle
Disadvantage • Best to use when you are confident about movement of market. • Small margin required. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • When there is surge in implied volatility, this strategy can give more profit. • Unlimited downside profit. • Limited risk and unlimited reward strategy. • 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 .

SHORT PUT LADDER

SHORT STRADDLE