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Comparision (SHORT PUT VS SHORT CALL LADDER)

 

Compare Strategies

  SHORT PUT SHORT CALL LADDER
About Strategy

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

Short Call Ladder Option Strategy 

This strategy is implemented when a trader is moderately bullish on the market, and volatility. It involves sale of an ITM Call Option, buying of an ATM Call Option & OTM Call Option. The risk associated with the strategy is limited.

SHORT PUT Vs SHORT CALL LADDER - Details

SHORT PUT SHORT CALL LADDER
Market View Bullish Neutral
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 1 3
Strategy Level Beginners Advance
Reward Profile Limited Unlimited
Risk Profile Unlimited Limited
Breakeven Point Strike Price - Premium Upper Breakeven Point = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

SHORT PUT Vs SHORT CALL LADDER - When & How to use ?

SHORT PUT SHORT CALL LADDER
Market View Bullish Neutral
When to use? This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. This strategy is implemented when a trader is moderately bullish on the market, and volatility
Action Sell Put Option Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call
Breakeven Point Strike Price - Premium Upper Breakeven Point = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

SHORT PUT Vs SHORT CALL LADDER - Risk & Reward

SHORT PUT SHORT CALL LADDER
Maximum Profit Scenario Premium received in your account when you sell the Put Option. Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received
Maximum Loss Scenario Unlimited (When the price of the underlying falls.) Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

SHORT PUT Vs SHORT CALL LADDER - Strategy Pros & Cons

SHORT PUT SHORT CALL LADDER
Similar Strategies Bull Put Spread, Short Starddle Short Put Ladder, Strip, Strap
Disadvantage • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. • Unlimited risk. • Margin required.
Advantages • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account. • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss.

SHORT PUT

SHORT CALL LADDER