Compare Strategies
| STOCK REPAIR | SHORT CALL LADDER | |
|---|---|---|
|
|
|
| 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 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:
|
STOCK REPAIR Vs SHORT CALL LADDER - Details
| STOCK REPAIR | SHORT CALL LADDER | |
|---|---|---|
| Market View | Bullish | Neutral |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) |
| Number Of Positions | 3 | 3 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | 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 |
STOCK REPAIR Vs SHORT CALL LADDER - When & How to use ?
| STOCK REPAIR | SHORT CALL 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 moderately bullish on the market, and volatility |
| Action | Buy 1 ATM Call, Sell 2 OTM Calls | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call |
| Breakeven Point | 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 |
STOCK REPAIR Vs SHORT CALL LADDER - Risk & Reward
| STOCK REPAIR | SHORT CALL LADDER | |
|---|---|---|
| Maximum Profit Scenario | Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received | |
| Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
STOCK REPAIR Vs SHORT CALL LADDER - Strategy Pros & Cons
| STOCK REPAIR | SHORT CALL LADDER | |
|---|---|---|
| Similar Strategies | Short Put Ladder, Strip, Strap | |
| Disadvantage | • Management required with all the positions. • Additional loss due to continuous decline in shares as downside risk remains unchanged. | • Unlimited risk. • 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. | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. |