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Comparision (SHORT CALL LADDER VS REVERSE IRON BUTTERFLY)

 

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  SHORT CALL LADDER REVERSE IRON BUTTERFLY
About Strategy

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.

Reverse Iron Butterfly Option Strategy

Reverse Iron Butterfly as the name suggests is the opposite of Iron Butterfly. In Reverse Iron Butterfly, a trader is bullish on volatility and expects the market to make significant move in the near future in either directions. Here a trader will buy 1 ATM Call Option, sell 1 OTM Call Option, buy 1 ATM Put Option, sell 1 OTM Put Option. This strategy also bags lim ..

SHORT CALL LADDER Vs REVERSE IRON BUTTERFLY - Details

SHORT CALL LADDER REVERSE IRON BUTTERFLY
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 3 4
Strategy Level Advance Advance
Reward Profile Unlimited Limited
Risk Profile Limited 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 Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid

SHORT CALL LADDER Vs REVERSE IRON BUTTERFLY - When & How to use ?

SHORT CALL LADDER REVERSE IRON BUTTERFLY
Market View Neutral Neutral
When to use? This strategy is implemented when a trader is moderately bullish on the market, and volatility This strategy is used when a trader is bullish on volatility and expects the market to make significant move in the near future in either directions.
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call Sell 1 OTM Put, Buy 1 ATM Put, Buy 1 ATM Call, Sell 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 Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid, Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid

SHORT CALL LADDER Vs REVERSE IRON BUTTERFLY - Risk & Reward

SHORT CALL LADDER REVERSE IRON BUTTERFLY
Maximum Profit Scenario Profit Achieved When Price of Underlying > Total Strike Prices of Long Calls - Strike Price of Short Call + Net Premium Received Strike Price of Short Call (or Long Put) - Strike Price of Long Call (or Short Put) - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid Net Premium Paid + Commissions Paid
Risk Limited Limited
Reward Unlimited Limited

SHORT CALL LADDER Vs REVERSE IRON BUTTERFLY - Strategy Pros & Cons

SHORT CALL LADDER REVERSE IRON BUTTERFLY
Similar Strategies Short Put Ladder, Strip, Strap Short Put Butterfly, Short Condor
Disadvantage • Unlimited risk. • Margin required. • Potential loss is higher than gain, complex strategy. • Not suitable for beginners.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. • Able to profit whether stocks move in either direction up or down. • This strategy can be used by option traders who cannot use credit spreads. • Predictable maximum loss and profits, volatile strategy.

SHORT CALL LADDER

REVERSE IRON BUTTERFLY