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Comparision (SHORT CALL LADDER VS LONG STRADDLE)

 

Compare Strategies

  SHORT CALL LADDER LONG STRADDLE
About Strategy

Short Call Ladder Option Strategy 

This strategy is implemented when a trader is moderately bullish on the market, and volatility. It involves sale of an ITM Call Option, buying of an ATM Call Option & OTM Call Option. The risk associated with the strategy is limited.

Long Straddle Option Strategy 

Straddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc ..

SHORT CALL LADDER Vs LONG STRADDLE - Details

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

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

SHORT CALL LADDER LONG STRADDLE
Market View Neutral Neutral
When to use? This strategy is implemented when a trader is moderately bullish on the market, and volatility This options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations.
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call Buy Call Option, Buy Put Option
Breakeven Point Upper Breakeven Point = Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium

SHORT CALL LADDER Vs LONG STRADDLE - Risk & Reward

SHORT CALL LADDER LONG STRADDLE
Maximum Profit Scenario Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Max profit is achieved when at one option is exercised.
Maximum Loss Scenario Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid Maximum Loss = Net Premium Paid
Risk Limited Limited
Reward Unlimited Unlimited

SHORT CALL LADDER Vs LONG STRADDLE - Strategy Pros & Cons

SHORT CALL LADDER LONG STRADDLE
Similar Strategies Short Put Ladder, Strip, Strap Bear Put Spread
Disadvantage • Unlimited risk. • Margin required. • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit.

SHORT CALL LADDER

LONG STRADDLE