Compare Strategies
SHORT CALL LADDER | LONG STRADDLE | |
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About Strategy |
Short Call Ladder Option StrategyThis 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. Risk:
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Long Straddle Option StrategyStraddle 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 | |
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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 | |
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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. |