Compare Strategies
BEAR CALL SPREAD | LONG PUT LADDER | |
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About Strategy |
Bear Call Spread Option StrategyBear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r |
Long Put Ladder Option StrategyLong Put Ladder can be implemented when a trader is slightly bearish on the market and volatility. It involves buying of an ITM Put Option and sale of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is unlimited and reward is limited. Risk:< .. |
BEAR CALL SPREAD Vs LONG PUT LADDER - Details
BEAR CALL SPREAD | LONG PUT LADDER | |
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Market View | Bearish | Neutral |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price of Short Call + Net Premium Received | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid |
BEAR CALL SPREAD Vs LONG PUT LADDER - When & How to use ?
BEAR CALL SPREAD | LONG PUT LADDER | |
---|---|---|
Market View | Bearish | Neutral |
When to use? | This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. | This Strategy can be implemented when a trader is slightly bearish on the market and volatility. |
Action | Buy OTM Call Option, Sell ITM Call Option | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put |
Breakeven Point | Strike Price of Short Call + Net Premium Received | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid |
BEAR CALL SPREAD Vs LONG PUT LADDER - Risk & Reward
BEAR CALL SPREAD | LONG PUT LADDER | |
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Maximum Profit Scenario | Max Profit = Net Premium Received - Commissions Paid | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received | When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid |
Risk | Limited | Unlimited |
Reward | Limited | Limited |
BEAR CALL SPREAD Vs LONG PUT LADDER - Strategy Pros & Cons
BEAR CALL SPREAD | LONG PUT LADDER | |
---|---|---|
Similar Strategies | Bear Put Spread, Bull Call Spread | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • Limited amount of profit. • Margin requirement, more commission charges. | • Unlimited risk. • Margin required. |
Advantages | • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. | • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |