← Strategy LabLesson 44 · 4:16
Bull call ladder
Summary
A bull call ladder suits a view that XYZ rises a little, to between $105 and $110. You pay $126 and can make up to $374 anywhere from $105 to $110; a fall costs only the $126, but above $113.74 the loss has no limit. You break even at $101.26 and $113.74.
Key terms
- bull call ladder
- A bull call spread with one more call sold above it, which makes it cheaper and lifts the top but leaves that call uncovered.
- long call ladder
- Another name for the bull call ladder.
- bull call spread
- Buy a lower-strike call and sell a higher-strike call with the same expiry, paying to open, to profit from a rise.
- uncovered call
- A sold call with no bought call or shares behind it, so its loss on a big rise has no limit.
- margin
- Money your broker holds against what a sold position could lose.
- flat top
- The range of prices, here $95 to $105, where a long condor makes the same most-it-can-make result on the last day.
Check yourself
Answer each question to see why the right answer is right.
1. What does the lesson's bull call ladder cost to open?
2. XYZ ends at $110 on the last day. What is your result?
3. Where are the two break-evens?
4. Which leg of the bull call ladder is uncovered?
5. XYZ does not move and ends at $100. What is your result?
Finished the video and the quiz? .