Compare Strategies
SHORT CALL LADDER | LONG CALL | |
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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 Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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SHORT CALL LADDER Vs LONG CALL - Details
SHORT CALL LADDER | LONG CALL | |
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Market View | Neutral | Bullish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 3 | 1 |
Strategy Level | Advance | Beginner Level |
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 | Strike Price + Premium |
SHORT CALL LADDER Vs LONG CALL - When & How to use ?
SHORT CALL LADDER | LONG CALL | |
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Market View | Neutral | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) |
When to use? | This strategy is implemented when a trader is moderately bullish on the market, and volatility | This strategy work when an investor expect the underlying instrument move in upward direction. |
Action | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call | Buying Call 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 | Strike price + Premium |
SHORT CALL LADDER Vs LONG CALL - Risk & Reward
SHORT CALL LADDER | LONG CALL | |
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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 | Underlying Asset close above from the strike price on expiry. |
Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Premium Paid |
Risk | Limited | Limited |
Reward | Unlimited | Unlimited |
SHORT CALL LADDER Vs LONG CALL - Strategy Pros & Cons
SHORT CALL LADDER | LONG CALL | |
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Similar Strategies | Short Put Ladder, Strip, Strap | Protective Put |
Disadvantage | • Unlimited risk. • Margin required. | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. |
Advantages | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. |