Compare Strategies
SHORT CALL LADDER | BEAR PUT SPREAD | |
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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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Bear Put Spread Option StrategyWhen a trader is moderately bearish on the market he can implement this strategy. Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike. However, if it falls below the OTM .. |
SHORT CALL LADDER Vs BEAR PUT SPREAD - Details
SHORT CALL LADDER | BEAR PUT SPREAD | |
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Market View | Neutral | Bearish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 3 | 2 |
Strategy Level | Advance | Advance |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Limited |
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 of Long Put - Net Premium |
SHORT CALL LADDER Vs BEAR PUT SPREAD - When & How to use ?
SHORT CALL LADDER | BEAR PUT SPREAD | |
---|---|---|
Market View | Neutral | Bearish |
When to use? | This strategy is implemented when a trader is moderately bullish on the market, and volatility | The bear call spread options 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 | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call | Buy ITM Put Option, Sell OTM 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 of Long Put - Net Premium |
SHORT CALL LADDER Vs BEAR PUT SPREAD - Risk & Reward
SHORT CALL LADDER | BEAR PUT SPREAD | |
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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 | Max Profit = Strike Price of Long Put - Strike Price of Short Put - Net Premium Paid. |
Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Max Loss = Net Premium Paid. |
Risk | Limited | Limited |
Reward | Unlimited | Limited |
SHORT CALL LADDER Vs BEAR PUT SPREAD - Strategy Pros & Cons
SHORT CALL LADDER | BEAR PUT SPREAD | |
---|---|---|
Similar Strategies | Short Put Ladder, Strip, Strap | Bear Call Spread, Bull Call Spread |
Disadvantage | • Unlimited risk. • Margin required. | • Limited profit. • Early assignment risk. |
Advantages | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. | • If the strike price, expiration date or underlying stocks are rightly chosen then risk of losses would be limited to the net premium paid. • This strategy works well in declining markets. • Limited risk. |