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Comparision (LONG CALL LADDER VS SHORT STRADDLE)

 

Compare Strategies

  LONG CALL LADDER SHORT STRADDLE
About Strategy

Long Call Ladder Option Strategy 

Long 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.

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..

LONG CALL LADDER Vs SHORT STRADDLE - Details

LONG CALL LADDER SHORT STRADDLE
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 3 2
Strategy Level Advance Advance
Reward Profile Unlimited Limited
Risk Profile Unlimited Unlimited
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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

LONG CALL LADDER Vs SHORT STRADDLE - When & How to use ?

LONG CALL LADDER SHORT STRADDLE
Market View Neutral Neutral
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 work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call Sell Call Option, Sell Put 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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

LONG CALL LADDER Vs SHORT STRADDLE - Risk & Reward

LONG CALL LADDER SHORT STRADDLE
Maximum Profit Scenario Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Price of Underlying - Upper Breakeven Price + Commissions Paid Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Unlimited Unlimited
Reward Unlimited Limited

LONG CALL LADDER Vs SHORT STRADDLE - Strategy Pros & Cons

LONG CALL LADDER SHORT STRADDLE
Similar Strategies Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) Short Strangle
Disadvantage • Unlimited risk. • Margin required. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

LONG CALL LADDER

SHORT STRADDLE