Compare Strategies
| LONG CALL LADDER | LONG STRANGLE | |
|---|---|---|
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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 Strangle Option StrategyA Strangle is similar to Straddle. In Strangle, a trader will purchase one OTM Call Option and one OTM Put Option, of the same expiry date and the same underlying asset. This strategy will reduce the entry cost for trader and it is also cheaper than straddle. A trader will make profits, if the market moves sharply in either direction and gives extra-ordinary returns in the .. |
LONG CALL LADDER Vs LONG STRANGLE - Details
| LONG CALL LADDER | LONG STRANGLE | |
|---|---|---|
| Market View | Neutral | Neutral |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
| Number Of Positions | 3 | 2 |
| 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 | Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium |
LONG CALL LADDER Vs LONG STRANGLE - When & How to use ?
| LONG CALL LADDER | LONG STRANGLE | |
|---|---|---|
| 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 is used in special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buy OTM Call Option, Buy OTM Put Option |
| 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 | Lower Breakeven Point = Strike Price of Put - Net Premium, Upper Breakeven Point = Strike Price of Call + Net Premium |
LONG CALL LADDER Vs LONG STRANGLE - Risk & Reward
| LONG CALL LADDER | LONG STRANGLE | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Profit = Price of Underlying - Strike Price of Long Call - Net Premium Paid |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Max Loss = Net Premium Paid |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Unlimited |
LONG CALL LADDER Vs LONG STRANGLE - Strategy Pros & Cons
| LONG CALL LADDER | LONG STRANGLE | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Long Straddle, Short Strangle |
| Disadvantage | • Unlimited risk. • Margin required. | • Require significant price movement to book profit. • Traders can lose more money if the underlying asset stayed stagnant. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Able to book profit, no matter if the underlying asset goes in either direction. • Limited loss to the debit paid. • If the underlying asset continues to move in one direction then you can book Unlimited profit . |