Compare Strategies
SHORT CALL LADDER | SHORT 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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Short Straddle Option strategyThis strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an .. |
SHORT CALL LADDER Vs SHORT STRADDLE - Details
SHORT CALL LADDER | SHORT STRADDLE | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 3 | 2 |
Strategy Level | Advance | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Unlimited |
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 SHORT STRADDLE - When & How to use ?
SHORT CALL LADDER | SHORT STRADDLE | |
---|---|---|
Market View | Neutral | Neutral |
When to use? | This strategy is implemented when a trader is moderately bullish on the market, and volatility | This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset. |
Action | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call | Sell Call Option, Sell 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 SHORT STRADDLE - Risk & Reward
SHORT CALL LADDER | SHORT 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 = Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received |
Risk | Limited | Unlimited |
Reward | Unlimited | Limited |
SHORT CALL LADDER Vs SHORT STRADDLE - Strategy Pros & Cons
SHORT CALL LADDER | SHORT STRADDLE | |
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Similar Strategies | Short Put Ladder, Strip, Strap | Short Strangle |
Disadvantage | • Unlimited risk. • Margin required. | • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. |
Advantages | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. | • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option . |