Comparision (LONG CALL LADDER
VS BEAR CALL SPREAD)
Compare Strategies
LONG CALL LADDER
BEAR CALL SPREAD
About Strategy
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.
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 ..
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
Strike Price of Short Call + Net Premium Received
LONG CALL LADDER Vs BEAR CALL SPREAD - When & How to use ?
LONG CALL LADDER
BEAR CALL SPREAD
Market View
Neutral
Bearish
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.
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.
Action
Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Buy OTM Call Option, Sell ITM 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
Strike Price of Short Call + Net Premium Received
LONG CALL LADDER Vs BEAR CALL SPREAD - Risk & Reward
LONG CALL LADDER
BEAR CALL SPREAD
Maximum Profit Scenario
Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario
Price of Underlying - Upper Breakeven Price + Commissions Paid
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk
Unlimited
Limited
Reward
Unlimited
Limited
LONG CALL LADDER Vs BEAR CALL SPREAD - Strategy Pros & Cons
LONG CALL LADDER
BEAR CALL SPREAD
Similar Strategies
Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Bear Put Spread, Bull Call Spread
Disadvantage
• Unlimited risk. • Margin required.
• Limited amount of profit. • Margin requirement, more commission charges.
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 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.