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Comparision (SHORT CALL LADDER VS SHORT PUT)

 

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  SHORT CALL LADDER SHORT PUT
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.

Short Put Option Strategy

A trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level.
Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put.

SHORT CALL LADDER Vs SHORT PUT - Details

SHORT CALL LADDER SHORT PUT
Market View Neutral Bullish
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 3 1
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 Strike Price - Premium

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

SHORT CALL LADDER SHORT PUT
Market View Neutral Bullish
When to use? This strategy is implemented when a trader is moderately bullish on the market, and volatility This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level.
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call 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 Strike Price - Premium

SHORT CALL LADDER Vs SHORT PUT - Risk & Reward

SHORT CALL LADDER SHORT PUT
Maximum Profit Scenario Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Premium received in your account when you sell the Put Option.
Maximum Loss Scenario Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid Unlimited (When the price of the underlying falls.)
Risk Limited Unlimited
Reward Unlimited Limited

SHORT CALL LADDER Vs SHORT PUT - Strategy Pros & Cons

SHORT CALL LADDER SHORT PUT
Similar Strategies Short Put Ladder, Strip, Strap Bull Put Spread, Short Starddle
Disadvantage • Unlimited risk. • Margin required. • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account.

SHORT CALL LADDER

SHORT PUT