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Comparision (RATIO CALL WRITE VS SHORT CALL LADDER)

 

Compare Strategies

  RATIO CALL WRITE SHORT CALL LADDER
About Strategy

Ratio Call Write Option Strategy 

This strategy involves buying of an underlying asset in the cash/futures market and simultaneously selling ATM Calls double the number of long quantity. This strategy is used by a trader who is 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.

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.

RATIO CALL WRITE Vs SHORT CALL LADDER - Details

RATIO CALL WRITE SHORT CALL LADDER
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Limited Unlimited
Risk Profile Unlimited Limited
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit 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

RATIO CALL WRITE Vs SHORT CALL LADDER - When & How to use ?

RATIO CALL WRITE SHORT CALL LADDER
Market View Neutral Neutral
When to use? This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. This strategy is implemented when a trader is moderately bullish on the market, and volatility
Action Sell 2 ATM Calls Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call
Breakeven Point Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit 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

RATIO CALL WRITE Vs SHORT CALL LADDER - Risk & Reward

RATIO CALL WRITE SHORT CALL LADDER
Maximum Profit Scenario Net Premium Received - Commissions Paid Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received
Maximum Loss Scenario Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

RATIO CALL WRITE Vs SHORT CALL LADDER - Strategy Pros & Cons

RATIO CALL WRITE SHORT CALL LADDER
Similar Strategies Variable Ratio Write Short Put Ladder, Strip, Strap
Disadvantage • Potential loss is higher than gain. • Limited profit. • Unlimited risk. • Margin required.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss.

RATIO CALL WRITE

SHORT CALL LADDER