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Comparision (LONG PUT VS SHORT CALL LADDER)

 

Compare Strategies

  LONG PUT SHORT 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.<

Short Call Ladder Option Strategy 

This strategy is implemented when a trader is moderately bullish on the market, and volatility. It involves sale of an ITM Call Option, buying of an ATM Call Option & OTM Call Option. The risk associated with the strategy is limited.

LONG PUT Vs SHORT CALL LADDER - Details

LONG PUT SHORT 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 Limited
Breakeven Point Strike Price of Long Put - Premium Paid Upper Breakeven Point = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

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

LONG PUT SHORT 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 implemented when a trader is moderately bullish on the market, and volatility
Action Buy Put Option Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call
Breakeven Point Strike Price of Long Put - Premium Paid Upper Breakeven Point = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

LONG PUT Vs SHORT CALL LADDER - Risk & Reward

LONG PUT SHORT CALL LADDER
Maximum Profit Scenario Profit = Strike Price of Long Put - Premium Paid Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received
Maximum Loss Scenario Max Loss = Premium Paid + Commissions Paid Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Limited Limited
Reward Unlimited Unlimited

LONG PUT Vs SHORT CALL LADDER - Strategy Pros & Cons

LONG PUT SHORT CALL LADDER
Similar Strategies Protective Call, Short Put Short Put Ladder, Strip, Strap
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. • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss.

LONG PUT

SHORT CALL LADDER