Compare Strategies
| STOCK REPAIR | SHORT PUT LADDER | |
|---|---|---|
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| About Strategy |
Stock Repair Option StrategyStock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. Suppose Mr. X has |
Short Put Ladder Option StrategyThis strategy is implemented when a trader is slightly bearish on the market. A trader is required to be bullish over the volatility in the market. It involves sale of an ITM Put Option and buying of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is limited.
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STOCK REPAIR Vs SHORT PUT LADDER - Details
| STOCK REPAIR | SHORT PUT LADDER | |
|---|---|---|
| Market View | Bullish | Neutral |
| Type (CE/PE) | CE (Call Option) | PE (Put Option) |
| Number Of Positions | 3 | 3 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received |
STOCK REPAIR Vs SHORT PUT LADDER - When & How to use ?
| STOCK REPAIR | SHORT PUT LADDER | |
|---|---|---|
| Market View | Bullish | Neutral |
| When to use? | Stock Repair Strategy is used to cover up for losses made on long stock position. After the long position suffered losses on stock price fall, a trader will implement this strategy in order to bring down the breakeven price and capping his further losses thereby increasing his probability of loss recovery. | This strategy is implemented when a trader is slightly bearish on the market. |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Sell ITM Put Option, Buying 1 ATM & 1 OTM Put Option. |
| Breakeven Point | Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received |
STOCK REPAIR Vs SHORT PUT LADDER - Risk & Reward
| STOCK REPAIR | SHORT PUT LADDER | |
|---|---|---|
| Maximum Profit Scenario | When Price of Underlying < Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received | |
| Maximum Loss Scenario | Strike Price of Short Put - Strike Price of Higher Strike Long Put - Net Premium Received + Commissions Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
STOCK REPAIR Vs SHORT PUT LADDER - Strategy Pros & Cons
| STOCK REPAIR | SHORT PUT LADDER | |
|---|---|---|
| Similar Strategies | Strap, Strip | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Best to use when you are confident about movement of market. • Small margin required. |
| Advantages | • This strategy creates an opportunity to recover losses by lowering our breakeven. • No margin required. • No additional downside risk and costs nothing to put on. | • When there is surge in implied volatility, this strategy can give more profit. • Unlimited downside profit. • Limited risk and unlimited reward strategy. |