Comparision (SHORT PUT LADDER
VS BEAR CALL SPREAD)
Compare Strategies
SHORT PUT LADDER
BEAR CALL SPREAD
About Strategy
Short Put Ladder Option Strategy
This strategy is implemented when a trader is slightly bearish on the market. A trader is required to be bullish over the volatility in the market. It involves sale of an ITM Put Option and buying of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is limited.
Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r ..
Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received
Strike Price of Short Call + Net Premium Received
SHORT PUT LADDER Vs BEAR CALL SPREAD - When & How to use ?
SHORT PUT LADDER
BEAR CALL SPREAD
Market View
Neutral
Bearish
When to use?
This strategy is implemented when a trader is slightly bearish on the market.
This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action
Sell ITM Put Option, Buying 1 ATM & 1 OTM Put Option.
Buy OTM Call Option, Sell ITM Call Option
Breakeven Point
Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received
Strike Price of Short Call + Net Premium Received
SHORT PUT LADDER Vs BEAR CALL SPREAD - Risk & Reward
SHORT PUT LADDER
BEAR CALL SPREAD
Maximum Profit Scenario
When Price of Underlying < Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received
Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario
Strike Price of Short Put - Strike Price of Higher Strike Long Put - Net Premium Received + Commissions Paid
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk
Limited
Limited
Reward
Unlimited
Limited
SHORT PUT LADDER Vs BEAR CALL SPREAD - Strategy Pros & Cons
SHORT PUT LADDER
BEAR CALL SPREAD
Similar Strategies
Strap, Strip
Bear Put Spread, Bull Call Spread
Disadvantage
• Best to use when you are confident about movement of market. • Small margin required.
• Limited amount of profit. • Margin requirement, more commission charges.
Advantages
• When there is surge in implied volatility, this strategy can give more profit. • Unlimited downside profit. • Limited risk and unlimited reward strategy.
• This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk.