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Comparision (SHORT CALL LADDER VS RATIO PUT WRITE)

 

Compare Strategies

  SHORT CALL LADDER RATIO PUT WRITE
About Strategy

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 Put Write Option Strategy 

This 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. ..

SHORT CALL LADDER Vs RATIO PUT WRITE - Details

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

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

SHORT CALL LADDER RATIO PUT WRITE
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 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
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call Sell 2 ATM Puts
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 Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit

SHORT CALL LADDER Vs RATIO PUT WRITE - Risk & Reward

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

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

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

SHORT CALL LADDER

RATIO PUT WRITE