Compare Strategies
RATIO CALL WRITE | SHORT PUT LADDER | |
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About Strategy |
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 Put Ladder Option StrategyThis strategy is implemented when a trader is slightly bearish on the market. A trader is required to be bullish over the volatility in the market. It involves sale of an ITM Put Option and buying of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is limited.
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RATIO CALL WRITE Vs SHORT PUT LADDER - Details
RATIO CALL WRITE | SHORT PUT LADDER | |
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Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Limited | Unlimited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit | Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received |
RATIO CALL WRITE Vs SHORT PUT LADDER - When & How to use ?
RATIO CALL WRITE | SHORT PUT LADDER | |
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Market View | Neutral | Neutral |
When to use? | This strategy is used by a trader who is neutral on the market and bearish on the volatility in the near future. | This strategy is implemented when a trader is slightly bearish on the market. |
Action | Sell 2 ATM Calls | Sell ITM Put Option, Buying 1 ATM & 1 OTM Put Option. |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Calls + Points of Maximum Profit, Lower Breakeven Point = Strike Price of Short Calls - Points of Maximum Profit | Upper Breakeven Point = Strike Price of Short Put - Net Premium Received Lower Breakeven Point = Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received |
RATIO CALL WRITE Vs SHORT PUT LADDER - Risk & Reward
RATIO CALL WRITE | SHORT PUT LADDER | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | When Price of Underlying < Total Strike Prices of Long Puts - Strike Price of Short Put + Net Premium Received |
Maximum Loss Scenario | Price of Underlying - Strike Price of Short Call - Net Premium Received OR Purchase Price of Underlying - Price of Underlying - Net Premium Received + Commissions Paid | Strike Price of Short Put - Strike Price of Higher Strike Long Put - Net Premium Received + Commissions Paid |
Risk | Unlimited | Limited |
Reward | Limited | Unlimited |
RATIO CALL WRITE Vs SHORT PUT LADDER - Strategy Pros & Cons
RATIO CALL WRITE | SHORT PUT LADDER | |
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Similar Strategies | Variable Ratio Write | Strap, Strip |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • Best to use when you are confident about movement of market. • Small margin required. |
Advantages | • When there is surge in implied volatility, this strategy can give more profit. • Unlimited downside profit. • Limited risk and unlimited reward strategy. |