Bear Call Ladder can be thought of as a combination of a Bear Call Spread and a Long Call. Usually, a Bear Call spread is set up when the outlook is Bearish. But, in a Bear Call Ladder, an additional Call is bought along with the Bear Call Spread as an adjustment if the outlook turns bullish.
This strategy should be executed above the resistance line identified for the short term. First, set up a Bear Call Spread and hold it as long as price does not break resistance. If price breaks the resistance and turns bullish, immediately buy a higher strike OTM call to adjust the position and turn it into a Bear Call Ladder.
Sell Lower Strike Calls
Eg: Sell 10000 CALL
Buy a slightly Higher Strike or Middle Strike CALL
Eg: Buy 10100 CALL
Buy another Higher strike CALL
Eg: Buy 10200 Call
Bear Call Ladder
In the pay-off graph above, the price of the underlying asset (Nifty) is plotted in the X-Axis and the profit/loss is plotted in the Y-Axis.
The black line with dots indicates the profit or loss at different prices of the underlying asset.
The region shaded in green indicates profitable zone and the region shaded in grey indicates loss zone.
A positive number (75 = Buy 1 lot) in the Quantity column indicates a Buy position and a negative number (-75 = Sell 1 lot) indicates a Sell position.
|Time Decay Impact [Theta]||
|Volatility impact [Vega]||