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