Ladder option strategy
Trade options FREE For 60 Rates options forts 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 ladder option strategy as well as options on futures.
However, for active traders, commissions can eat up 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.
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 profit potential and limited risk.