Compare Strategies
LONG STRADDLE | LONG PUT LADDER | |
---|---|---|
![]() |
![]() |
|
About Strategy |
Long Straddle Option StrategyStraddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc |
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:< .. |
LONG STRADDLE Vs LONG PUT LADDER - Details
LONG STRADDLE | LONG PUT LADDER | |
---|---|---|
Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | PE (Put Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium | 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 |
LONG STRADDLE Vs LONG PUT LADDER - When & How to use ?
LONG STRADDLE | LONG PUT LADDER | |
---|---|---|
Market View | Neutral | Neutral |
When to use? | This options strategy is work well when and investor market view is bearish. 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 Call Option, Buy Put Option | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium | 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 |
LONG STRADDLE Vs LONG PUT LADDER - Risk & Reward
LONG STRADDLE | LONG PUT LADDER | |
---|---|---|
Maximum Profit Scenario | Max profit is achieved when at one option is exercised. | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Maximum Loss = Net Premium Paid | When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid |
Risk | Limited | Unlimited |
Reward | Unlimited | Limited |
LONG STRADDLE Vs LONG PUT LADDER - Strategy Pros & Cons
LONG STRADDLE | LONG PUT LADDER | |
---|---|---|
Similar Strategies | Bear Put Spread | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. | • Unlimited risk. • Margin required. |
Advantages | • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. | • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |