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Comparision (RATIO PUT WRITE VS LONG CALL LADDER)

 

Compare Strategies

  RATIO PUT WRITE LONG CALL LADDER
About Strategy

Ratio Put Write Option Strategy 

This strategy is implemented by selling (short) the underlying asset in the cash/futures market. Simultaneously, sell ATM Puts double the number of long quantity. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future. Here profits will be capped up to the premium amount and risk will be potentially unlimited.

Long Call Ladder Option Strategy 

Long Call Ladder Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility. It involves buying of an ITM Call Option and sale of 1 ATM & 1 OTM Call Options. However, the risk associated with this strategy is unlimited and reward is limited.

RATIO PUT WRITE Vs LONG CALL LADDER - Details

RATIO PUT WRITE LONG CALL LADDER
Market View Neutral Neutral
Type (CE/PE) PE (Put Option) CE (Call Option)
Number Of Positions 2 3
Strategy Level Beginners Advance
Reward Profile Max Profit Achieved When Price of Underlying = Strike Price of Short Puts Unlimited
Risk Profile Loss Occurs When Price of Underlying < Strike Price of Short Put - Net Premium Received OR Price of Underlying > Strike Price of Short Put + Net Premium Received Unlimited
Breakeven Point Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid

RATIO PUT WRITE Vs LONG CALL LADDER - When & How to use ?

RATIO PUT WRITE LONG CALL LADDER
Market View Neutral Neutral
When to use? This strategy is implemented by selling (short) the underlying asset in the cash/futures market. This strategy is used by a trader who in neutral on the market and bearish on the volatility in the near future This Strategy is an extension to Bull Call Spread Strategy. A trader will be slightly bullish about the market, in this strategy but bearish over volatility.
Action Sell 2 ATM Puts Buy 1 ITM Call, Sell 1 ATM Call, Sell 1 OTM Call
Breakeven Point Upper Breakeven Point = Strike Price of Short Puts + Points of Maximum Profit Lower Breakeven Point = Strike Price of Short Puts - Points of Maximum Profit Upper Breakeven Point = Total Strike Prices of Short Calls - Strike Price of Long Call - Net Premium Paid, Lower Breakeven Point = Strike Price of Long Call + Net Premium Paid

RATIO PUT WRITE Vs LONG CALL LADDER - Risk & Reward

RATIO PUT WRITE LONG CALL LADDER
Maximum Profit Scenario Net Premium Received - Commissions Paid Strike Price of Lower Strike Short Call - Strike Price of Long Call - Net Premium Paid - Commissions Paid
Maximum Loss Scenario Price of Underlying - Sale Price of Underlying - Net Premium Received OR Strike Price of Short Put - Price of Underlying - Net Premium Received + Commissions Paid Price of Underlying - Upper Breakeven Price + Commissions Paid
Risk Unlimited Unlimited
Reward Limited Unlimited

RATIO PUT WRITE Vs LONG CALL LADDER - Strategy Pros & Cons

RATIO PUT WRITE LONG CALL LADDER
Similar Strategies Short Strangle and Short Straddle Short Strangle (Sell Strangle), Short Straddle (Sell Straddle)
Disadvantage • Potential loss is higher than gain. • Limited profit. • Unlimited risk. • Margin required.
Advantages • Reduces capital outlay of bull call spread. • Wider maximum profit zone. • When there is decrease in implied volatility, this strategy can give profit.

RATIO PUT WRITE

LONG CALL LADDER