Penelope Hughes

March 2, 2020

Long Call Ladder

(You can also watch my complete video regarding Ladder Options πŸ‘‰πŸ‘‰πŸ‘‰https://www.youtube.com/watch?v=lLRG6Q52zxo)

The long call ladder, or bull call ladder, is a limited profit, unlimited risk strategy in options trading that is employed when the options trader thinks that the underlying security will experience little volatility in the near term. To set up the long call ladder, the options trader purchases an in-the-money call, sells an at-the-money call and sells another higher strike out-of-the-money call of the same underlying security and expiration date.

Long Call Ladder Construction

> Buy 1 ITM Call
> Sell 1 ATM Call
> Sell 1 OTM Call

The long call ladder can also be thought of as an extension to the bull call spread by selling another higher striking call. The purpose of shorting another call is to further finance the cost of establishing the spread position at the expense of being exposed to unlimited risk in the event that the underlying stock price rally explosively.

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