Compare Strategies
LONG PUT LADDER | BEAR CALL SPREAD | |
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About Strategy |
Long Put Ladder Option StrategyLong Put Ladder can be implemented when a trader is slightly bearish on the market and volatility. It involves buying of an ITM Put Option and sale of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is unlimited and reward is limited. Risk:< |
Bear Call Spread Option StrategyBear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date. When you write a call, you receive premium thereby r .. |
LONG PUT LADDER Vs BEAR CALL SPREAD - Details
LONG PUT LADDER | BEAR CALL SPREAD | |
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Market View | Neutral | Bearish |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 3 | 2 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Strike Price of Short Call + Net Premium Received |
LONG PUT LADDER Vs BEAR CALL SPREAD - When & How to use ?
LONG PUT LADDER | BEAR CALL SPREAD | |
---|---|---|
Market View | Neutral | Bearish |
When to use? | This Strategy can be implemented when a trader is slightly bearish on the market and volatility. | This strategy is used when you are bearish in market view. The strategy minimizes your risk in the event of prime movements going against your expectations. |
Action | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put | Buy OTM Call Option, Sell ITM Call Option |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Strike Price of Short Call + Net Premium Received |
LONG PUT LADDER Vs BEAR CALL SPREAD - Risk & Reward
LONG PUT LADDER | BEAR CALL SPREAD | |
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Maximum Profit Scenario | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid | Max Profit = Net Premium Received - Commissions Paid |
Maximum Loss Scenario | When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
LONG PUT LADDER Vs BEAR CALL SPREAD - Strategy Pros & Cons
LONG PUT LADDER | BEAR CALL SPREAD | |
---|---|---|
Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Bear Put Spread, Bull Call Spread |
Disadvantage | • Unlimited risk. • Margin required. | • Limited amount of profit. • Margin requirement, more commission charges. |
Advantages | • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • This strategy takes advantage of time decay. • Investors can get profit in a flat market scenario. • Investors can earn options premium income with a lower degree of risk. |