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Comparision (SHORT CALL LADDER VS RATIO CALL WRITE)

 

Compare Strategies

  SHORT CALL LADDER RATIO CALL 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 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 Vs RATIO CALL WRITE - Details

SHORT CALL LADDER RATIO CALL WRITE
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 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 Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

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

SHORT CALL LADDER RATIO CALL 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 used by a trader who is 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 Calls
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 Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit

SHORT CALL LADDER Vs RATIO CALL WRITE - Risk & Reward

SHORT CALL LADDER RATIO CALL 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 - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid
Risk Limited Unlimited
Reward Unlimited Limited

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

SHORT CALL LADDER RATIO CALL WRITE
Similar Strategies Short Put Ladder, Strip, Strap Variable Ratio Write
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 CALL WRITE