Compare Strategies
RATIO PUT WRITE | LONG CALL LADDER | |
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About Strategy |
Ratio Put Write Option StrategyThis strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in 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. |
Long Call Ladder Option StrategyLong Call Ladder Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. It involves buying of an ITM Call Option and sale of 1 ATM & 1 OTM Call Options. However, the risk associated with this strategy is unlimited and reward is limited. |
RATIO PUT WRITE Vs LONG CALL LADDER - Details
RATIO PUT WRITE | LONG CALL LADDER | |
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Market View | Neutral | Neutral |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 2 | 3 |
Strategy Level | Beginners | Advance |
Reward Profile | Max Profit Achieved When Price of Underlying = Strike Price of Short Puts | Unlimited |
Risk Profile | Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received | Unlimited |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit | Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid |
RATIO PUT WRITE Vs LONG CALL LADDER - When & How to use ?
RATIO PUT WRITE | LONG CALL LADDER | |
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Market View | Neutral | Neutral |
When to use? | This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future | This Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. |
Action | Sell 2 ATM Puts | Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call |
Breakeven Point | Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit | Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid |
RATIO PUT WRITE Vs LONG CALL LADDER - Risk & Reward
RATIO PUT WRITE | LONG CALL LADDER | |
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Maximum Profit Scenario | Net Premium Received - Commissions Paid | Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid |
Maximum Loss Scenario | Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid | Price of Underlying - Upper Breakeven Price + Commissions Paid |
Risk | Unlimited | Unlimited |
Reward | Limited | Unlimited |
RATIO PUT WRITE Vs LONG CALL LADDER - Strategy Pros & Cons
RATIO PUT WRITE | LONG CALL LADDER | |
---|---|---|
Similar Strategies | Short Strangle and Short Straddle | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) |
Disadvantage | • Potential loss is higher than gain. • Limited profit. | • Unlimited risk. • Margin required. |
Advantages | • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. |