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Comparision (LONG PUT VS LONG PUT LADDER)

 

Compare Strategies

  LONG PUT LONG PUT LADDER
About Strategy

Long Put Option Strategy

This strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future.
Risk: The maximum loss will be the premium amount paid.<

Long Put Ladder Option Strategy 

Long Put Ladder can be implemented when a trader is slightly bearish on the market and volatility. It involves buying of an ITM Put Option and sale of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is unlimited and reward is limited.
Risk:< ..

LONG PUT Vs LONG PUT LADDER - Details

LONG PUT LONG PUT LADDER
Market View Bearish Neutral
Type (CE/PE) PE (Put Option) PE (Put Option)
Number Of Positions 1 3
Strategy Level Beginners Advance
Reward Profile Unlimited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Long Put - Premium Paid Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid

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

LONG PUT LONG PUT LADDER
Market View Bearish Neutral
When to use? A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. This Strategy can be implemented when a trader is slightly bearish on the market and volatility.
Action Buy Put Option Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put
Breakeven Point Strike Price of Long Put - Premium Paid Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid

LONG PUT Vs LONG PUT LADDER - Risk & Reward

LONG PUT LONG PUT LADDER
Maximum Profit Scenario Profit = Strike Price of Long Put - Premium Paid Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Max Loss = Premium Paid + Commissions Paid When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid
Risk Limited Unlimited
Reward Unlimited Limited

LONG PUT Vs LONG PUT LADDER - Strategy Pros & Cons

LONG PUT LONG PUT LADDER
Similar Strategies Protective Call, Short Put Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. • Unlimited risk. • Margin required.
Advantages • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

LONG PUT

LONG PUT LADDER