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Comparision (SHORT CALL LADDER VS SHORT STRADDLE)

 

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  SHORT CALL LADDER SHORT STRADDLE
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.

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..

SHORT CALL LADDER Vs SHORT STRADDLE - Details

SHORT CALL LADDER SHORT STRADDLE
Market View Neutral Neutral
Type (CE/PE) CE (Call Option) CE (Call Option) + PE (Put Option)
Number Of Positions 3 2
Strategy Level Advance Advance
Reward Profile Unlimited Limited
Risk Profile Limited Unlimited
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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT CALL LADDER Vs SHORT STRADDLE - When & How to use ?

SHORT CALL LADDER SHORT STRADDLE
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 work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call Sell Call Option, Sell Put Option
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 Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT CALL LADDER Vs SHORT STRADDLE - Risk & Reward

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

SHORT CALL LADDER Vs SHORT STRADDLE - Strategy Pros & Cons

SHORT CALL LADDER SHORT STRADDLE
Similar Strategies Short Put Ladder, Strip, Strap Short Strangle
Disadvantage • Unlimited risk. • Margin required. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

SHORT CALL LADDER

SHORT STRADDLE