Question

Explain how to build a bull put ladder, what are the purposes of a bull put...

Explain how to build a bull put ladder, what are the purposes of a bull put ladder strategy? Build a real bull put ladder condor for an American stock of your choice, pull the options contracts and paste them on the answer. Please explain each part of it, what the credit or debit will be for the transaction, include every detail of each option contract you will use to build the bull put ladder trade.

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Answer #1

Bull Put Ladder- It is the option strategy, it is a bearish strategy. It is also called Bear put ladder.

When to use- It is used when underlying security or market is little volatile in near term and moderately bearish.

How to use- Option trader purchases the In the money (ITM) put, sells At the money (ATM) and sells Out of the money (OTM) put of the same underlying. This strategy requires margin.

Upper Break-even point- Strike price of Long put - Net premium paid

Lower Break-even point- Strike prices of short puts - Strike price of long put + Net premium paid

Profit- Limited to the (Strike price of long put - Strike price of higher strike short put - Brokerage paid - Net premium paid

Risk- Unlimited (If underlying stock falls below lower break-even)

Recommendation- This strategy should not be carried forward for more than a day or two also option trader should keep the sto

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