Compare Strategies
LONG STRADDLE | SHORT CALL LADDER | |
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About Strategy |
Long Straddle Option StrategyStraddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc |
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:
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LONG STRADDLE Vs SHORT CALL LADDER - Details
LONG STRADDLE | SHORT CALL LADDER | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + 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 |
LONG STRADDLE Vs SHORT CALL LADDER - When & How to use ?
LONG STRADDLE | SHORT CALL LADDER | |
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Market View | Neutral | Neutral |
When to use? | This options strategy is work well when and investor market view is bearish. 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 Call Option, Buy Put Option | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call |
Breakeven Point | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + 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 |
LONG STRADDLE Vs SHORT CALL LADDER - Risk & Reward
LONG STRADDLE | SHORT CALL LADDER | |
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Maximum Profit Scenario | Max profit is achieved when at one option is exercised. | Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received |
Maximum Loss Scenario | Maximum 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 | Unlimited | Unlimited |
LONG STRADDLE Vs SHORT CALL LADDER - Strategy Pros & Cons
LONG STRADDLE | SHORT CALL LADDER | |
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Similar Strategies | Bear Put Spread | Short Put Ladder, Strip, Strap |
Disadvantage | • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. | • Unlimited risk. • Margin required. |
Advantages | • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. |