STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (LONG STRADDLE VS LONG PUT LADDER)

 

Compare Strategies

  LONG STRADDLE LONG PUT LADDER
About Strategy

Long Straddle Option Strategy 

Straddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc

Long Put Ladder Option Strategy 

Long 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 STRADDLE Vs LONG PUT LADDER - Details

LONG STRADDLE LONG PUT LADDER
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) PE (Put Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Unlimited Limited
Risk Profile Limited Unlimited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net 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 STRADDLE Vs LONG PUT LADDER - When & How to use ?

LONG STRADDLE LONG PUT LADDER
Market View Neutral Neutral
When to use? This options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations. This Strategy can be implemented when a trader is slightly bearish on the market and volatility.
Action Buy Call Option, Buy Put Option Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net 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 STRADDLE Vs LONG PUT LADDER - Risk & Reward

LONG STRADDLE LONG PUT LADDER
Maximum Profit Scenario Max profit is achieved when at one option is exercised. Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Maximum Loss = Net 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 STRADDLE Vs LONG PUT LADDER - Strategy Pros & Cons

LONG STRADDLE LONG PUT LADDER
Similar Strategies Bear Put Spread Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. • Unlimited risk. • Margin required.
Advantages • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

LONG STRADDLE

LONG PUT LADDER