Compare Strategies
BEAR PUT SPREAD | SHORT CALL LADDER | |
---|---|---|
About Strategy |
Bear Put Spread Option StrategyWhen a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM |
Short Call Ladder Option StrategyThis 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. Risk:
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BEAR PUT SPREAD Vs SHORT CALL LADDER - Details
BEAR PUT SPREAD | SHORT CALL LADDER | |
---|---|---|
Market View | Bearish | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Advance | Advance |
Reward Profile | Limited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price of Long Put - Net Premium | 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 |
BEAR PUT SPREAD Vs SHORT CALL LADDER - When & How to use ?
BEAR PUT SPREAD | SHORT CALL LADDER | |
---|---|---|
Market View | Bearish | Neutral |
When to use? | The bear call spread options 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. | This strategy is implemented when a trader is moderately bullish on the market, and volatility |
Action | Buy ITM Put Option, Sell OTM Put Option | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call |
Breakeven Point | Strike Price of Long Put - Net Premium | 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 |
BEAR PUT SPREAD Vs SHORT CALL LADDER - Risk & Reward
BEAR PUT SPREAD | SHORT CALL LADDER | |
---|---|---|
Maximum Profit Scenario | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net 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 = Net Premium Paid. | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid |
Risk | Limited | Limited |
Reward | Limited | Unlimited |
BEAR PUT SPREAD Vs SHORT CALL LADDER - Strategy Pros & Cons
BEAR PUT SPREAD | SHORT CALL LADDER | |
---|---|---|
Similar Strategies | Bear Call Spread, Bull Call Spread | Short Put Ladder, Strip, Strap |
Disadvantage | • Limited profit. • Early assignment risk. | • Unlimited risk. • Margin required. |
Advantages | • If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk. | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. |