Compare Strategies
SHORT CALL LADDER | RATIO CALL WRITE | |
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About Strategy |
Short Call Ladder Option StrategyThis 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. Risk:
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Ratio Call Write Option StrategyThis 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 | |
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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 | |
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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 | |
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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. |