Compare Strategies
LONG CALL | LONG PUT LADDER | |
---|---|---|
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 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 CALL Vs LONG PUT LADDER - Details
LONG CALL | LONG PUT LADDER | |
---|---|---|
Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 3 |
Strategy Level | Beginner Level | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price + 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 CALL Vs LONG PUT LADDER - When & How to use ?
LONG CALL | LONG PUT 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 can be implemented when a trader is slightly bearish on the market and volatility. |
Action | Buying Call option | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put |
Breakeven Point | Strike price + 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 CALL Vs LONG PUT LADDER - Risk & Reward
LONG CALL | LONG PUT LADDER | |
---|---|---|
Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | 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 CALL Vs LONG PUT LADDER - Strategy Pros & Cons
LONG CALL | LONG PUT LADDER | |
---|---|---|
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 bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |