Compare Strategies
| SHORT CALL LADDER | PUT BACKSPREAD | |
|---|---|---|
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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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Put Backspread Option StrategyIf the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns. |
SHORT CALL LADDER Vs PUT BACKSPREAD - Details
| SHORT CALL LADDER | PUT BACKSPREAD | |
|---|---|---|
| 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 | |
| Risk Profile | 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 |
SHORT CALL LADDER Vs PUT BACKSPREAD - When & How to use ?
| SHORT CALL LADDER | PUT BACKSPREAD | |
|---|---|---|
| Market View | Neutral | Bearish |
| When to use? | This strategy is implemented when a trader is moderately bullish on the market, and volatility | |
| Action | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call | |
| 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 |
SHORT CALL LADDER Vs PUT BACKSPREAD - Risk & Reward
| SHORT CALL LADDER | PUT BACKSPREAD | |
|---|---|---|
| Maximum Profit Scenario | Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received | |
| Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | |
| Risk | Limited | Limited |
| Reward | Unlimited | Unlimited |
SHORT CALL LADDER Vs PUT BACKSPREAD - Strategy Pros & Cons
| SHORT CALL LADDER | PUT BACKSPREAD | |
|---|---|---|
| Similar Strategies | Short Put Ladder, Strip, Strap | |
| Disadvantage | • Unlimited risk. • Margin required. | |
| Advantages | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. |