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Comparision (LONG PUT LADDER VS BEAR CALL SPREAD)

 

Compare Strategies

  LONG PUT LADDER BEAR CALL SPREAD
About Strategy

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 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 Vs BEAR CALL SPREAD - Details

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

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

LONG PUT LADDER BEAR CALL SPREAD
Market View Neutral Bearish
When to use? This Strategy can be implemented when a trader is slightly bearish on the market and 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 Put, Sell 1 ATM Put, Sell 1 OTM Put Buy OTM Call Option, Sell ITM Call Option
Breakeven Point 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 Strike Price of Short Call + Net Premium Received

LONG PUT LADDER Vs BEAR CALL SPREAD - Risk & Reward

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

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

LONG PUT 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 bear put 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.

LONG PUT LADDER

BEAR CALL SPREAD