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Comparision (LONG PUT VS LONG CALL LADDER)

 

Compare Strategies

  LONG PUT LONG CALL LADDER
About Strategy

Long Put Option Strategy

This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future.
Risk: The maximum loss will be the premium amount paid.<

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.

LONG PUT Vs LONG CALL LADDER - Details

LONG PUT LONG CALL LADDER
Market View Bearish Neutral
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 1 3
Strategy Level Beginners Advance
Reward Profile Unlimited Unlimited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Long Put - Premium Paid 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 PUT Vs LONG CALL LADDER - When & How to use ?

LONG PUT LONG CALL LADDER
Market View Bearish Neutral
When to use? A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. 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 Buy Put Option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Strike Price of Long Put - Premium Paid 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 PUT Vs LONG CALL LADDER - Risk & Reward

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

LONG PUT Vs LONG CALL LADDER - Strategy Pros & Cons

LONG PUT LONG CALL LADDER
Similar Strategies Protective Call, Short Put Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. • Unlimited risk. • Margin required.
Advantages • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

LONG PUT

LONG CALL LADDER