Compare Strategies
LONG CALL LADDER | LONG CALL | |
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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 Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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LONG CALL LADDER Vs LONG CALL - Details
LONG CALL LADDER | LONG CALL | |
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Market View | Neutral | Bullish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 3 | 1 |
Strategy Level | Advance | Beginner Level |
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 | Strike Price + Premium |
LONG CALL LADDER Vs LONG CALL - When & How to use ?
LONG CALL LADDER | LONG CALL | |
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Market View | Neutral | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) |
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 work when an investor expect the underlying instrument move in upward direction. |
Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buying 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 + Premium |
LONG CALL LADDER Vs LONG CALL - Risk & Reward
LONG CALL LADDER | LONG CALL | |
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Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Underlying Asset close above from the strike price on expiry. |
Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Premium Paid |
Risk | Unlimited | Limited |
Reward | Unlimited | Unlimited |
LONG CALL LADDER Vs LONG CALL - Strategy Pros & Cons
LONG CALL LADDER | LONG CALL | |
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Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Protective Put |
Disadvantage | • Unlimited risk. • Margin required. | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. |
Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. |