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Comparision (LONG CALL LADDER VS SHORT PUT)

 

Compare Strategies

  LONG CALL LADDER SHORT PUT
About Strategy

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.

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

LONG CALL LADDER Vs SHORT PUT - Details

LONG CALL LADDER SHORT PUT
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 3 1
Strategy Level Advance Beginners
Reward Profile Unlimited Limited
Risk Profile Unlimited Unlimited
Breakeven Point 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 Strike Price - Premium

LONG CALL LADDER Vs SHORT PUT - When & How to use ?

LONG CALL LADDER SHORT PUT
Market View Neutral Bullish
When to use? 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. This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call Sell Put Option
Breakeven Point 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 Strike Price - Premium

LONG CALL LADDER Vs SHORT PUT - Risk & Reward

LONG CALL LADDER SHORT PUT
Maximum Profit Scenario Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Price of Underlying - Upper Breakeven Price + Commissions Paid Unlimited (When the price of the underlying falls.)
Risk Unlimited Unlimited
Reward Unlimited Limited

LONG CALL LADDER Vs SHORT PUT - Strategy Pros & Cons

LONG CALL LADDER SHORT PUT
Similar Strategies Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) Bull Put Spread, Short Starddle
Disadvantage • Unlimited risk. • Margin required. • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

LONG CALL LADDER

SHORT PUT