Bull Call Ladder Spread

A Bull Call Ladder Spread involves buying one call option at a lower strike price and selling multiple call options at higher strike prices. It profits from a limited price rise but carries risk if the price rises sharply.

• Ideal for moderately bullish conditions, where a limited price rise is expected.
• Selling additional OTM calls increases premium income but caps profit and increases risk for sharp price increases.
• Risk increases significantly beyond the sold strikes, but profit is capped for moderate price increases.

Example:

• NIFTY trading at 18,000.
• Buy 18,000 Call at ₹200, sell 18,300 Call at ₹100, and sell 18,500 Call at ₹50 (lot size = 50).
• Outcome:
  1. If NIFTY rises to 18,300 at expiry:
     • Gain on bought call = ₹300 × 50 = ₹15,000.
     • Loss on sold calls = ₹0.
     • Net profit = ₹15,000 − ₹2,500 (net premium) = ₹12,500.
  2. If NIFTY rises to 18,600 at expiry:
     • Gain on bought call = ₹600 × 50 = ₹30,000.
     • Loss on sold calls = ₹300 × 50 = ₹15,000 (18,300 Call) + ₹100 × 50 = ₹5,000 (18,500 Call).
     • Net loss = ₹30,000 − ₹20,000 − ₹2,500 = ₹7,500.
  3. If NIFTY stays below 18,000 at expiry:
     • All options expire worthless.
     • Net loss = ₹2,500.