Compare Strategies
| LONG PUT | SHORT CALL LADDER | |
|---|---|---|
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| About Strategy |
Long Put Option StrategyThis strategy is implemented by buying 1 Put Option i.e. a single position, when the person is bearish on the market and expects the market to move downwards in the near future. |
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 PUT Vs SHORT CALL LADDER - Details
| LONG PUT | SHORT CALL LADDER | |
|---|---|---|
| Market View | Bearish | Neutral |
| Type (CE/PE) | PE (Put Option) | CE (Call Option) |
| Number Of Positions | 1 | 3 |
| Strategy Level | Beginners | Advance |
| Reward Profile | Unlimited | Unlimited |
| Risk Profile | Limited | Limited |
| Breakeven Point | Strike Price of Long Put - Premium Paid | 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 |
LONG PUT Vs SHORT CALL LADDER - When & How to use ?
| LONG PUT | SHORT CALL LADDER | |
|---|---|---|
| Market View | Bearish | Neutral |
| When to use? | A long put option strategy works well when you're expecting the underlying asset to sharply decline or be volatile in near future. | This strategy is implemented when a trader is moderately bullish on the market, and volatility |
| Action | Buy Put Option | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call |
| Breakeven Point | Strike Price of Long Put - Premium Paid | 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 |
LONG PUT Vs SHORT CALL LADDER - Risk & Reward
| LONG PUT | SHORT CALL LADDER | |
|---|---|---|
| Maximum Profit Scenario | Profit = Strike Price of Long Put - Premium Paid | Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received |
| Maximum Loss Scenario | Max Loss = Premium Paid + Commissions Paid | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
LONG PUT Vs SHORT CALL LADDER - Strategy Pros & Cons
| LONG PUT | SHORT CALL LADDER | |
|---|---|---|
| Similar Strategies | Protective Call, Short Put | Short Put Ladder, Strip, Strap |
| Disadvantage | • 100% loss if strike price, expiration dates or underlying stocks are badly chosen. • Time decay. | • Unlimited risk. • Margin required. |
| Advantages | • Limited risk to the premium paid. • Less capital investment and more profit. • Unlimited profit potential with limited risk. | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. |