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Comparision (LONG CALL LADDER VS RATIO PUT WRITE)

 

Compare Strategies

  LONG CALL LADDER RATIO PUT WRITE
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.

Ratio Put Write Option Strategy 

This strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. ..

LONG CALL LADDER Vs RATIO PUT WRITE - Details

LONG CALL LADDER RATIO PUT WRITE
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 3 2
Strategy Level Advance Beginners
Reward Profile Unlimited Max Profit Achieved When Price of Underlying = Strike Price of Short Puts
Risk Profile Unlimited Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received
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 Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit

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

LONG CALL LADDER RATIO PUT WRITE
Market View Neutral Neutral
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 is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future
Action Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call Sell 2 ATM Puts
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 Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit

LONG CALL LADDER Vs RATIO PUT WRITE - Risk & Reward

LONG CALL LADDER RATIO PUT WRITE
Maximum Profit Scenario Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid Net Premium Received - Commissions Paid
Maximum Loss Scenario Price of Underlying - Upper Breakeven Price + Commissions Paid Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid
Risk Unlimited Unlimited
Reward Unlimited Limited

LONG CALL LADDER Vs RATIO PUT WRITE - Strategy Pros & Cons

LONG CALL LADDER RATIO PUT WRITE
Similar Strategies Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) Short Strangle and Short Straddle
Disadvantage • Unlimited risk. • Margin required. • Potential loss is higher than gain. • Limited profit.
Advantages • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

LONG CALL LADDER

RATIO PUT WRITE