Compare Strategies
RISK REVERSAL | LONG CALL LADDER | |
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About Strategy |
Risk Reversal Option StrategyThis strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod |
Long Call Ladder Option StrategyLong 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. |
RISK REVERSAL Vs LONG CALL LADDER - Details
RISK REVERSAL | LONG CALL LADDER | |
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Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Advance | Advance |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Unlimited | Unlimited |
Breakeven Point | Premium received - Put Strike Price | 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 |
RISK REVERSAL Vs LONG CALL LADDER - When & How to use ?
RISK REVERSAL | LONG CALL LADDER | |
---|---|---|
Market View | Bullish | Neutral |
When to use? | This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option. | 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. |
Action | This strategy work when an investor want to hedge their position by buying a put option and selling a call option. | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call |
Breakeven Point | Premium received - Put Strike Price | 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 |
RISK REVERSAL Vs LONG CALL LADDER - Risk & Reward
RISK REVERSAL | LONG CALL LADDER | |
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Maximum Profit Scenario | You have unlimited profit potential to the upside. | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | You have nearly unlimited downside risk as well because you are short the put | Price of Underlying - Upper Breakeven Price + Commissions Paid |
Risk | Unlimited | Unlimited |
Reward | Unlimited | Unlimited |
RISK REVERSAL Vs LONG CALL LADDER - Strategy Pros & Cons
RISK REVERSAL | LONG CALL LADDER | |
---|---|---|
Similar Strategies | - | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | Unlimited Risk. | • Unlimited risk. • Margin required. |
Advantages | Unlimited profit. | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |