Compare Strategies
LONG PUT LADDER | LONG CALL | |
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About Strategy |
Long Put Ladder Option StrategyLong Put Ladder can be implemented when a trader is slightly bearish on the market and volatility. It involves buying of an ITM Put Option and sale of 1 ATM & 1 OTM Put Options. However, the risk associated with this strategy is unlimited and reward is limited. Risk:< |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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LONG PUT LADDER Vs LONG CALL - Details
LONG PUT LADDER | LONG CALL | |
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Market View | Neutral | Bullish |
Type (CE/PE) | PE (Put Option) | CE (Call Option) |
Number Of Positions | 3 | 1 |
Strategy Level | Advance | Beginner Level |
Reward Profile | Limited | Unlimited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Strike Price + Premium |
LONG PUT LADDER Vs LONG CALL - When & How to use ?
LONG PUT LADDER | LONG CALL | |
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Market View | Neutral | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) |
When to use? | This Strategy can be implemented when a trader is slightly bearish on the market and volatility. | This strategy work when an investor expect the underlying instrument move in upward direction. |
Action | Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put | Buying Call option |
Breakeven Point | Upper Breakeven Point = Strike Price of Long Put - Net Premium Paid, Lower Breakeven Point = Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Strike price + Premium |
LONG PUT LADDER Vs LONG CALL - Risk & Reward
LONG PUT LADDER | LONG CALL | |
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Maximum Profit Scenario | Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid | Underlying Asset close above from the strike price on expiry. |
Maximum Loss Scenario | When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid | Premium Paid |
Risk | Unlimited | Limited |
Reward | Limited | Unlimited |
LONG PUT LADDER Vs LONG CALL - Strategy Pros & Cons
LONG PUT LADDER | LONG CALL | |
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Similar Strategies | Short Strangle (Sell Strangle), Short Straddle (Sell Straddle) | Protective Put |
Disadvantage | • Unlimited risk. • Margin required. | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. |
Advantages | • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit. | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. |