Compare Strategies
| LONG CALL LADDER | LONG CALL BUTTERFLY | |
|---|---|---|
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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. |
Long Call Butterfly Option StrategyA trader, who is neutral in nature and believes that there will be very low volatility i.e. expects the market to remain range bound, will implement this strategy. This strategy involves selling of 2 ATM Call Options, buying 1 ITM Call Option & buying 1 OTM Call Option of the same expiry date & same underlying asset. The difference between the strikes sho .. |
LONG CALL LADDER Vs LONG CALL BUTTERFLY - Details
| LONG CALL LADDER | LONG CALL BUTTERFLY | |
|---|---|---|
| Market View | Neutral | Neutral |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 4 |
| Strategy Level | Advance | Advance |
| Reward Profile | Unlimited | Limited |
| 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 | Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium |
LONG CALL LADDER Vs LONG CALL BUTTERFLY - When & How to use ?
| LONG CALL LADDER | LONG CALL BUTTERFLY | |
|---|---|---|
| Market View | Neutral | Neutral |
| 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. | This strategy should be used when you're expecting no volatility in the price of the underlying. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Sell 2 ATM Call, Buy 1 ITM Call, Buy 1 OTM Call |
| 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 | Upper Breakeven = Higher Strike Price - Net Premium, Lower Breakeven = Lower Strike Price + Net Premium |
LONG CALL LADDER Vs LONG CALL BUTTERFLY - Risk & Reward
| LONG CALL LADDER | LONG CALL BUTTERFLY | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Adjacent strikes - Net premium debit. |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Net Premium Paid |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Limited |
LONG CALL LADDER Vs LONG CALL BUTTERFLY - Strategy Pros & Cons
| LONG CALL LADDER | LONG CALL BUTTERFLY | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | - |
| Disadvantage | • Unlimited risk. • Margin required. | • Due to limited lifespan of call options, you can lose the premium paid. • Limited profit which is bound in a narrow range between the two wing strikes. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Under this strategy, a trader can book profit even when there is not volatility in the market. • Limited risks to the net premium paid. • This strategy allows you to gain more profits by investing less and limiting your losses to minimum. |