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A summary of the bear call ladder and the protective put
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Check out this video for a summary of the bear call ladder and the protective put.
Let’s first take up the bear call ladder. The bear call ladder can be useful when there is increased volatility in the market. It is also handy if you expect the market to turn bullish. So, how do you set up a bear call ladder? You sell 1 lot of in the money (ITM) call options. You purchase 1 lot of at the money (ATM) call options. And you purchase 1 more lot of out of the money (OTM) call options. The options will have different intrinsic values but the same expiry. Up next, we have the protective put. This strategy is generally used by traders to hedge their risk. To set up a protective put, you need to first own the shares of the company. You then need to purchase a put options contract of the same stock. Ensure that the lot size of the put options contract matches the total number of shares that you own. So, that wraps up the bear call ladder and the protective put. Up next, we have the bull ratio spread and the bear ratio spread. Keep reading, and keep learning with Smart Money!