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Comparision (SHORT CALL LADDER VS NEUTRAL CALENDAR SPREAD)

 

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  SHORT CALL LADDER NEUTRAL CALENDAR SPREAD
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.

Neutral Calendar Spread Option strategy 

This strategy is implemented if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option, hence reducing the cost of purchase, with the same strike price of the same underlying asset. This strategy is used when the trader wants to make money from the ..

SHORT CALL LADDER Vs NEUTRAL CALENDAR SPREAD - Details

SHORT CALL LADDER NEUTRAL CALENDAR SPREAD
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) CE (Call Option)
Number Of Positions 3 2
Strategy Level Advance Beginners
Reward Profile Unlimited Limited
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 -

SHORT CALL LADDER Vs NEUTRAL CALENDAR SPREAD - When & How to use ?

SHORT CALL LADDER NEUTRAL CALENDAR SPREAD
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 if the trader is neutral in the near future for say 2 months or so. This strategy involves writing of Near Month 1 ATM Call Option and buying 1 Mid Month ATM Call Option.
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call Sell 1 Near-Term ATM Call, Buy 1 Long-Term ATM Call
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 -

SHORT CALL LADDER Vs NEUTRAL CALENDAR SPREAD - Risk & Reward

SHORT CALL LADDER NEUTRAL CALENDAR SPREAD
Maximum Profit Scenario Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Maximum Profit Limited When underlying stock price remains unchanged on expiration of the near month options.
Maximum Loss Scenario Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid It occurs when the stock price goes down and stays down until expiration of the longer term options.
Risk Limited Limited
Reward Unlimited Limited

SHORT CALL LADDER Vs NEUTRAL CALENDAR SPREAD - Strategy Pros & Cons

SHORT CALL LADDER NEUTRAL CALENDAR SPREAD
Similar Strategies Short Put Ladder, Strip, Strap Long Put Butterfly, Iron Butterfly
Disadvantage • Unlimited risk. • Margin required. • Lower profitability • Must have enough experience.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. • Almost zero margin required. • Ability to profit from time decay, limited risk. • This strategy allows you to transform position into long position.

SHORT CALL LADDER

NEUTRAL CALENDAR SPREAD