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Comparision (BEAR PUT SPREAD VS SHORT CALL LADDER)

 

Compare Strategies

  BEAR PUT SPREAD SHORT CALL LADDER
About Strategy

Bear Put Spread Option Strategy 

When 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 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.

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.

BEAR PUT SPREAD

SHORT CALL LADDER