Compare Strategies
| SHORT CALL LADDER | SHORT PUT | |
|---|---|---|
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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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Short Put Option StrategyA 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. |