Options ladder trading strategy


options ladder trading strategy

Trade options FREE For 60 Days when you Open a New OptionsHouse Account Limited Risk Losses are limited when employing the short call ladder strategy and maximum loss occurs when the stock price is between the strike prices of the two long calls on expiration date. At this price, the higher striking long call expires worthless while the lower striking long call is worth much less than the short call, thus resulting in a loss. The breakeven points can be calculated using the following formulae.

Note: While we have covered the use of this strategy with reference to stock options, the short call ladder is equally applicable using ETF options, index options as well as options on futures.

options ladder trading strategy

However, for active traders, commissions can eat options ladder trading strategy a sizable portion of their profits in the long run. If you trade options actively, it is wise to look for a low commissions broker.

options ladder trading strategy

Traders who trade large number of contracts in each trade should check out OptionsHouse. Similar Strategies The following strategies are similar to the short call ladder in that they are also high volatility strategies that have unlimited bond deposit option potential and limited risk.

options ladder trading strategy