Compare Strategies
SHORT CALL LADDER | SHORT CALL | |
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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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Short Call Option StrategyA trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders. However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited. If the strategy .. |
SHORT CALL LADDER Vs SHORT CALL - Details
SHORT CALL LADDER | SHORT CALL | |
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Market View | Neutral | Bearish |
Type (CE/PE) | CE (Call Option) | CE (Call Option) |
Number Of Positions | 3 | 1 |
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 | Strike Price of Short Call + Premium Received |
SHORT CALL LADDER Vs SHORT CALL - When & How to use ?
SHORT CALL LADDER | SHORT CALL | |
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Market View | Neutral | Bearish |
When to use? | This strategy is implemented when a trader is moderately bullish on the market, and volatility | It is an aggressive strategy and involves huge risks. It should be used only in case where trader is certain about the bearish market view on the underlying. |
Action | Sell 1 ITM Call, Buy 1 ATM Call, Buy 1 OTM Call | Sell or Write Call 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 | Strike Price of Short Call + Premium Received |
SHORT CALL LADDER Vs SHORT CALL - Risk & Reward
SHORT CALL LADDER | SHORT CALL | |
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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 = Premium Received |
Maximum Loss Scenario | Strike Price of Lower Strike Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid | Loss Occurs When Price of Underlying > Strike Price of Short Call + Premium Received |
Risk | Limited | Unlimited |
Reward | Unlimited | Limited |
SHORT CALL LADDER Vs SHORT CALL - Strategy Pros & Cons
SHORT CALL LADDER | SHORT CALL | |
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Similar Strategies | Short Put Ladder, Strip, Strap | Covered Put, Covered Calls |
Disadvantage | • Unlimited risk. • Margin required. | • Unlimited risk to the upside underlying stocks. • Potential loss more than the premium collected. |
Advantages | • Higher probability of profit. • Unlimited upside profit. • Limited maximum loss. | • With the help of this strategy, traders can book profit from falling prices in the underlying asset. • Less investment, more profit. • Traders can book profit when underlying stock price fall, move sideways or rise by a small amount. |