Compare Strategies
SHORT PUT | LONG CALL LADDER | |
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About Strategy |
Short Put Option StrategyA 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. |
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. |
SHORT PUT Vs LONG CALL LADDER - Details
SHORT PUT | LONG 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 | 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 |
SHORT PUT Vs LONG CALL LADDER - When & How to use ?
SHORT PUT | LONG 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 an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. |
Action | Sell Put 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 |
SHORT PUT Vs LONG CALL LADDER - Risk & Reward
SHORT PUT | LONG CALL LADDER | |
---|---|---|
Maximum Profit Scenario | Premium received in your account when you sell the Put Option. | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Unlimited (When the price of the underlying falls.) | Price of Underlying - Upper Breakeven Price + Commissions Paid |
Risk | Unlimited | Unlimited |
Reward | Limited | Unlimited |
SHORT PUT Vs LONG CALL LADDER - Strategy Pros & Cons
SHORT PUT | LONG CALL LADDER | |
---|---|---|
Similar Strategies | Bull Put Spread, Short Starddle | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
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. | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |