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Comparision (LONG PUT LADDER VS SHORT STRADDLE)

 

Compare Strategies

  LONG PUT LADDER SHORT STRADDLE
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:<

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 PUT LADDER Vs SHORT STRADDLE - Details

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

LONG PUT LADDER Vs SHORT STRADDLE - When & How to use ?

LONG PUT LADDER SHORT STRADDLE
Market View Neutral Neutral
When to use? This Strategy can be implemented when a trader is slightly bearish on the market and volatility. 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.
Action Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put Sell Call Option, Sell Put 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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

LONG PUT LADDER Vs SHORT STRADDLE - Risk & Reward

LONG PUT LADDER SHORT STRADDLE
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 Unlimited
Reward Limited Limited

LONG PUT LADDER Vs SHORT STRADDLE - Strategy Pros & Cons

LONG PUT LADDER SHORT STRADDLE
Similar Strategies Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) Short Strangle
Disadvantage • Unlimited risk. • Margin required. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. • 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 .

LONG PUT LADDER

SHORT STRADDLE