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Comparision (LONG CALL LADDER VS LONG CALL)

 

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  LONG CALL LADDER LONG CALL
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.

Long Call Option Strategy

This is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.

LONG CALL LADDER Vs LONG CALL - Details

LONG CALL LADDER LONG CALL
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 3 1
Strategy Level Advance Beginner Level
Reward Profile Unlimited Unlimited
Risk Profile Unlimited Limited
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 + Premium

LONG CALL LADDER Vs LONG CALL - When & How to use ?

LONG CALL LADDER LONG CALL
Market View Neutral Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.)
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 work when an investor expect the underlying instrument move in upward direction.
Action Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call Buying 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 + Premium

LONG CALL LADDER Vs LONG CALL - Risk & Reward

LONG CALL LADDER LONG CALL
Maximum Profit Scenario Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid Underlying Asset close above from the strike price on expiry.
Maximum Loss Scenario Price of Underlying - Upper Breakeven Price + Commissions Paid Premium Paid
Risk Unlimited Limited
Reward Unlimited Unlimited

LONG CALL LADDER Vs LONG CALL - Strategy Pros & Cons

LONG CALL LADDER LONG CALL
Similar Strategies Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) Protective Put
Disadvantage • Unlimited risk. • Margin required. • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen.
Advantages • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock.

LONG CALL LADDER

LONG CALL