Loading ... ... Please wait!      Loading
Visually Analyze Option Strategies
Market
 Home    Tutorials   Features   APPL 1.0   Webservices   Component-Lib    Login    Subscription   User Guide 

Bull Call Ladder

Description
		
	The Bull Call Ladder is an extension to the Bull Call Spread. By shorting another call
	at a higher strike price, the position assumes uncapped risk potential if the stock soars
	upwards. The problem is that now its not totally clear if we have a bullish or bearish
	strategy, so we have to designate it as a direction neutral strategy! We’d love the stock
	to rise to the middle strike price (the first Short Call) but not above the higher short
	call strike price. Anywhere in between the middle and higher strike is ideal.
	Because of the dangers of uncapped risk, this strategy becomes more appropriate
	for a short-term income trade. The net effect of the higher short strike is to reduce
	the cost and breakeven of the Bull Call Spread and adjust the directional nature of
	the trade. The higher call strike prices are further OTM and will therefore have
	lower premiums than the lower strike bought call.
	So, in summary, if the stock falls below the lower (buy) strike, you can make a loss;
	if the stock rises to anywhere between the middle and upper (short) strikes, you make
	your maximum profit; if the stock rises above the highest strike, then you can make
	unlimited losses. The extra leg also ensures that you may have two breakeven points.

P/L Profile

    



 
Copyright ©2012, Avasaram LLC. All rights reserved. Version 19.4.0 Follow us on   Contact
Disclaimer
The information contained in this website is provided to you "as is," for your informational purposes only, without any representation or warranty of accuracy or completeness of information or other warranty of any kind. In no event will avasaram.com be liable to any party for any direct, indirect, incidental, special or consequential damages for use of this website or reliance upon any information or material accessed via it or any other hyperlinked website including, but not limited to, damages arising from loss of profits, business interruption, or loss of data.