Compare Strategies
RATIO PUT WRITE | LONG PUT LADDER | |
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About Strategy |
Ratio Put Write Option StrategyThis strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited. |
Long Put Ladder Option StrategyLong 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:< .. |
RATIO PUT WRITE Vs LONG PUT LADDER - Details
RATIO PUT WRITE | LONG PUT LADDER | |
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Market View | Neutral | Neutral |
Type (CE/PE) | PE (Put Option) | PE (Put Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Max Profit Achieved When Price of Underlying = Strike Price of Short Puts | Limited |
Risk Profile | Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received | Unlimited |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit | 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 |
RATIO PUT WRITE Vs LONG PUT LADDER - When & How to use ?
RATIO PUT WRITE | LONG PUT LADDER | |
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Market View | Neutral | Neutral |
When to use? | This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future | This Strategy can be implemented when a trader is slightly bearish on the market and volatility. |
Action | Sell 2 ATM Puts | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit | 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 |
RATIO PUT WRITE Vs LONG PUT LADDER - Risk & Reward
RATIO PUT WRITE | LONG PUT LADDER | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid | When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid |
Risk | Unlimited | Unlimited |
Reward | Limited | Limited |
RATIO PUT WRITE Vs LONG PUT LADDER - Strategy Pros & Cons
RATIO PUT WRITE | LONG PUT LADDER | |
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Similar Strategies | Short Strangle and Short Straddle | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • Unlimited risk. • Margin required. |
Advantages | • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |