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Comparision (RATIO PUT WRITE VS SHORT CALL LADDER)

 

Compare Strategies

  RATIO PUT WRITE SHORT CALL LADDER
About Strategy

Ratio Put Write Option Strategy 

This 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.

Short Call Ladder Option Strategy 

This 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.

RATIO PUT WRITE Vs SHORT CALL LADDER - Details

RATIO PUT WRITE SHORT CALL LADDER
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 Limited
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 Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

RATIO PUT WRITE Vs SHORT CALL LADDER - When & How to use ?

RATIO PUT WRITE SHORT CALL LADDER
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 implemented when a trader is moderately bullish on the market, and volatility
Action Sell 2 ATM Puts Sell 1 ITM Call, Buy 1 ATM Call, Buy 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 Long Calls - Strike Price of Short Call + Net Premium Received Lower Breakeven Point = Strike Price of Short Call - Net Premium Received

RATIO PUT WRITE Vs SHORT CALL LADDER - Risk & Reward

RATIO PUT WRITE SHORT CALL LADDER
Maximum Profit Scenario Net Premium Received - Commissions Paid Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received
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 Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid
Risk Unlimited Limited
Reward Limited Unlimited

RATIO PUT WRITE Vs SHORT CALL LADDER - Strategy Pros & Cons

RATIO PUT WRITE SHORT CALL LADDER
Similar Strategies Short Strangle and Short Straddle Short Put Ladder, Strip, Strap
Disadvantage • Potential loss is higher than gain. • Limited profit. • Unlimited risk. • Margin required.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss.

RATIO PUT WRITE

SHORT CALL LADDER