Compare Strategies
| LONG CALL LADDER | BULL CALL SPREAD | |
|---|---|---|
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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. |
Bull Call Spread Option StrategyBull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date. .. |
LONG CALL LADDER Vs BULL CALL SPREAD - Details
| LONG CALL LADDER | BULL CALL SPREAD | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 2 |
| Strategy Level | Advance | Beginners |
| 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 | Strike price of purchased call + net premium paid |
LONG CALL LADDER Vs BULL CALL SPREAD - When & How to use ?
| LONG CALL LADDER | BULL CALL SPREAD | |
|---|---|---|
| Market View | Neutral | Bullish |
| 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 when an investor is Bullish in the market but expect the underlying to gain mildly in near future. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buy ITM Call Option, Sell OTM Call 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 | Strike price of purchased call + net premium paid |
LONG CALL LADDER Vs BULL CALL SPREAD - Risk & Reward
| LONG CALL LADDER | BULL CALL SPREAD | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Net Premium Paid |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Limited |
LONG CALL LADDER Vs BULL CALL SPREAD - Strategy Pros & Cons
| LONG CALL LADDER | BULL CALL SPREAD | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Collar |
| Disadvantage | • Unlimited risk. • Margin required. | • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. |