STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (BEAR CALL SPREAD VS LONG PUT LADDER)

 

Compare Strategies

  BEAR CALL SPREAD LONG PUT LADDER
About Strategy

Bear Call Spread Option Strategy 

Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r

Long Put Ladder Option Strategy 

Long Put Ladder can be implemented when a trader is slightly bearish on the market and volatility. It involves buying of an ITM Put Option and sale of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is unlimited and reward is limited.
Risk:< ..

BEAR CALL SPREAD Vs LONG PUT LADDER - Details

BEAR CALL SPREAD LONG PUT LADDER
Market View Bearish Neutral
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike Price of Short Call + Net Premium Received Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid

BEAR CALL SPREAD Vs LONG PUT LADDER - When & How to use ?

BEAR CALL SPREAD LONG PUT LADDER
Market View Bearish Neutral
When to use? This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. This Strategy can be implemented when a trader is slightly bearish on the market and volatility.
Action Buy OTM Call Option, Sell ITM Call Option Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put
Breakeven Point Strike Price of Short Call + Net Premium Received Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid

BEAR CALL SPREAD Vs LONG PUT LADDER - Risk & Reward

BEAR CALL SPREAD LONG PUT LADDER
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid
Risk Limited Unlimited
Reward Limited Limited

BEAR CALL SPREAD Vs LONG PUT LADDER - Strategy Pros & Cons

BEAR CALL SPREAD LONG PUT LADDER
Similar Strategies Bear Put Spread, Bull Call Spread Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Limited amount of profit. • Margin requirement, more commission charges. • Unlimited risk. • Margin required.
Advantages • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

BEAR CALL SPREAD

LONG PUT LADDER