Compare Strategies
SHORT STRADDLE | SHORT PUT LADDER | |
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About Strategy |
Short Straddle Option strategyThis 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 StrategyThis 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.
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SHORT STRADDLE Vs SHORT PUT LADDER - Details
SHORT STRADDLE | SHORT PUT LADDER | |
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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 | |
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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 | |
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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 | |
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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. |