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Comparision (LONG CALL VS LONG CALL LADDER)

 

Compare Strategies

  LONG CALL LONG CALL LADDER
About Strategy

Long Call Option Strategy

This is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.

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.

LONG CALL Vs LONG CALL LADDER - Details

LONG CALL LONG CALL LADDER
Market View Bullish Neutral
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 1 3
Strategy Level Beginner Level Advance
Reward Profile Unlimited Unlimited
Risk Profile Limited Unlimited
Breakeven Point Strike Price + Premium 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

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

LONG CALL LONG CALL LADDER
Market View Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) Neutral
When to use? This strategy work when an investor expect the underlying instrument move in upward direction. 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 Buying Call option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Strike price + Premium 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

LONG CALL Vs LONG CALL LADDER - Risk & Reward

LONG CALL LONG CALL LADDER
Maximum Profit Scenario Underlying Asset close above from the strike price on expiry. Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Premium Paid Price of Underlying - Upper Breakeven Price + Commissions Paid
Risk Limited Unlimited
Reward Unlimited Unlimited

LONG CALL Vs LONG CALL LADDER - Strategy Pros & Cons

LONG CALL LONG CALL LADDER
Similar Strategies Protective Put Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. • Unlimited risk. • Margin required.
Advantages • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. • 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

LONG CALL LADDER