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

Comparision (BEAR CALL SPREAD VS LONG CALL LADDER)

 

Compare Strategies

  BEAR CALL SPREAD LONG CALL LADDER
About Strategy

Bear Call Spread Option Strategy 

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

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.

BEAR CALL SPREAD Vs LONG CALL LADDER - Details

BEAR CALL SPREAD LONG CALL LADDER
Market View Bearish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Limited Unlimited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Short Call + Net Premium Received 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

BEAR CALL SPREAD Vs LONG CALL LADDER - When & How to use ?

BEAR CALL SPREAD LONG CALL LADDER
Market View Bearish Neutral
When to use? 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. 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 OTM Call Option, Sell ITM Call Option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Strike Price of Short Call + Net Premium Received 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

BEAR CALL SPREAD Vs LONG CALL LADDER - Risk & Reward

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

BEAR CALL SPREAD Vs LONG CALL LADDER - Strategy Pros & Cons

BEAR CALL SPREAD LONG CALL LADDER
Similar Strategies Bear Put Spread, Bull Call Spread Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges. • Unlimited risk. • Margin required.
Advantages • 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. • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

BEAR CALL SPREAD

LONG CALL LADDER