Long Call Ladder is a strategy that must be devised when the investor is moderately bullish on the market direction and expects volatility to be less in the market.
A Long Call Ladder strategy is formed by buying “In-the-Money Call Option”, selling one “At-the-Money Call Option” and one “Out-of-the-Money Call Option”.
A Long Call Ladder is an extension of Bull Call Spread.
The investor will benefit if the underlying Stock/ Index remains between strike prices of the Call options.
Investor view: Neutral on direction and bearish on Stock/ Index volatility.
Reward: Limited.Breakeven: Total strike prices of Short Calls – strike price of Long Call +/– net premium received