Compare Strategies
| LONG CALL LADDER | THE COLLAR | |
|---|---|---|
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| About Strategy |
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. |
The Collar Option StrategyCollar Strategy is an extension to Covered Call Strategy. A trader, who is bullish in nature but has a very low risk appetite and wants to mitigate his risk will implement the Collar Strategy. Collar involves buying of stock in either Cash/Futures Market, buying an ATM Put Option & selling an OTM Call Option. The expiry dates of the op .. |
LONG CALL LADDER Vs THE COLLAR - Details
| LONG CALL LADDER | THE COLLAR | |
|---|---|---|
| Market View | Neutral | Bullish |
| Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) + Underlying |
| Number Of Positions | 3 | 3 |
| Strategy Level | Advance | Advance |
| Reward Profile | Unlimited | Limited |
| Risk Profile | Unlimited | Limited |
| 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 | Price of Features - Call Premium + Put Premium |
LONG CALL LADDER Vs THE COLLAR - When & How to use ?
| LONG CALL LADDER | THE COLLAR | |
|---|---|---|
| Market View | Neutral | Bullish |
| 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. | It should be used only in case where trader is certain about the bearish market view. |
| Action | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call | Buy Underlying, Buy 1 ATM Put Option, Sell 1 OTM Call Option |
| 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 | Price of Features - Call Premium + Put Premium |
LONG CALL LADDER Vs THE COLLAR - Risk & Reward
| LONG CALL LADDER | THE COLLAR | |
|---|---|---|
| Maximum Profit Scenario | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid | Strike Price of Short Call - Purchase Price of Underlying + Net Premium Received |
| Maximum Loss Scenario | Price of Underlying - Upper Breakeven Price + Commissions Paid | Purchase Price of Underlying - Strike Price of Long Put - Net Premium Received |
| Risk | Unlimited | Limited |
| Reward | Unlimited | Limited |
LONG CALL LADDER Vs THE COLLAR - Strategy Pros & Cons
| LONG CALL LADDER | THE COLLAR | |
|---|---|---|
| Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Call Spread, Bull Put Spread |
| Disadvantage | • Unlimited risk. • Margin required. | • Limited profit. • A trader can book more profit without this strategy if the prices goes high. |
| Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • This strategy protects the losses on underlying asset. • Risk gets limited if the price of the stocks goes down. • Trader can get ownership benefits life dividend and voting rights. |