Compare Strategies
LONG CALL | LONG CALL LADDER | |
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About Strategy |
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 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 Vs LONG CALL LADDER - Details
LONG CALL | LONG CALL LADDER | |
---|---|---|
Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 1 | 3 |
Strategy Level | Beginner Level | Advance |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price + Premium | 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 |
LONG CALL Vs LONG CALL LADDER - When & How to use ?
LONG CALL | LONG CALL LADDER | |
---|---|---|
Market View | 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.) | Neutral |
When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | 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. |
Action | Buying Call option | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call |
Breakeven Point | Strike price + Premium | 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 |
LONG CALL Vs LONG CALL LADDER - Risk & Reward
LONG CALL | LONG CALL LADDER | |
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Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Premium Paid | Price of Underlying - Upper Breakeven Price + Commissions Paid |
Risk | Limited | Unlimited |
Reward | Unlimited | Unlimited |
LONG CALL Vs LONG CALL LADDER - Strategy Pros & Cons
LONG CALL | LONG CALL LADDER | |
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Similar Strategies | Protective Put | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • 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. | • Unlimited risk. • Margin required. |
Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |