STOCK BROKER REVIEW | INVESTING | UPCOMING IPO | ALGO TRADING | TECHNICAL ANALYSIS

Comparision (BULL CALL SPREAD VS LONG PUT LADDER)

 

Compare Strategies

  BULL CALL SPREAD LONG PUT LADDER
About Strategy

Bull Call Spread Option Strategy

Bull Call Spread option trading strategy is used by a trader who is bullish in nature and expects the underlying asset to give decent returns in the near future. This strategy includes buying of an ‘In The Money’ Call Option and selling of ‘Deep Out Of the Money’ Call Option of the same underlying asset and the same expiration date.

Long Put Ladder Option Strategy 

Long 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:< ..

BULL CALL SPREAD Vs LONG PUT LADDER - Details

BULL CALL SPREAD LONG PUT LADDER
Market View Bullish Neutral
Type (CE/PE) CE (Call Option) PE (Put Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Limited Unlimited
Breakeven Point Strike price of purchased call + net premium paid 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

BULL CALL SPREAD Vs LONG PUT LADDER - When & How to use ?

BULL CALL SPREAD LONG PUT LADDER
Market View Bullish Neutral
When to use? This strategy is used when an investor is Bullish in the market but expect the underlying to gain mildly in near future. This Strategy can be implemented when a trader is slightly bearish on the market and volatility.
Action Buy ITM Call Option, Sell OTM Call Option Buy 1 ITM Put, Sell 1 ATM Put, Sell 1 OTM Put
Breakeven Point Strike price of purchased call + net premium paid 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

BULL CALL SPREAD Vs LONG PUT LADDER - Risk & Reward

BULL CALL SPREAD LONG PUT LADDER
Maximum Profit Scenario (Strike Price of Call 1 - Strike Price of Call 2) - Net Premium Paid Strike Price of Long Put - Strike Price of Higher Strike Short Put - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Net Premium Paid When Price of Underlying < Total Strike Prices of Short Puts - Strike Price of Long Put + Net Premium Paid
Risk Limited Unlimited
Reward Limited Limited

BULL CALL SPREAD Vs LONG PUT LADDER - Strategy Pros & Cons

BULL CALL SPREAD LONG PUT LADDER
Similar Strategies Collar Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Limited profit potential to the higher strike call sold if the underlying stock price rises. • Maximum profit only if stock rises to the higher of 2 strike prices selected. • Unlimited risk. • Margin required.
Advantages • Allows you to reduce risk and cost of your investment. • When placing the spread, exit strategy is pre-determined in advance. • Risk is limited to the net premium paid. • Reduces capital outlay of bear put spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

BULL CALL SPREAD

LONG PUT LADDER