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Comparision (SHORT STRADDLE VS LONG CALL LADDER)

 

Compare Strategies

  SHORT STRADDLE LONG CALL LADDER
About Strategy

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an

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.

SHORT STRADDLE Vs LONG CALL LADDER - Details

SHORT STRADDLE LONG CALL LADDER
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) + PE (Put Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Advance Advance
Reward Profile Limited Unlimited
Risk Profile Unlimited Unlimited
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net 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 STRADDLE Vs LONG CALL LADDER - When & How to use ?

SHORT STRADDLE LONG CALL LADDER
Market View Neutral Neutral
When to use? This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset. 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 Call Option, Sell Put Option Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net 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 STRADDLE Vs LONG CALL LADDER - Risk & Reward

SHORT STRADDLE LONG CALL LADDER
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Price of Underlying - Upper Breakeven Price + Commissions Paid
Risk Unlimited Unlimited
Reward Limited Unlimited

SHORT STRADDLE Vs LONG CALL LADDER - Strategy Pros & Cons

SHORT STRADDLE LONG CALL LADDER
Similar Strategies Short Strangle Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • Unlimited risk. • Margin required.
Advantages • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option . • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

SHORT STRADDLE

LONG CALL LADDER