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1. Lecture No 24
Bull Put Ladder
Rohan Sharma (Coach)

2. Basics Concepts – Bull Put Ladder
Proficiency -
Advanced
Direction –
Bearish
Volatility - High
Asset Leg –
Long Put+ Long
Put + Short Put
Max Risk -
Limited
Max Reward -
Unlimited
Income
Strategies

3. Description – Bull Put Ladder
 The Bull Put Ladder is an extension to the Bull Put Spread.
By buying another put at a lower strike, the position
assumes uncapped reward potential if the stock plummets.
In Summary if the stock falls below the lower (buy) strike,
we make potentially uncapped profit until the stock reaches
zero;
if the stock rises to anywhere between the middle and
upper (short) strikes, we make our maximum loss.
The extra leg also ensures that we may have two breakeven
points.

4. Description – Bull Put Ladder
 This can be a net debit or net credit transaction because while your sold puts
will be more valuable than your bought puts, you’re buying more puts that
you’re selling.
Your maximum reward on the trade is uncapped because you are buying more
puts than you’re selling.
Your total risk on the trade is limited to the difference between the lower and
middle strike prices less your interim risk.
• Buy lower strike puts.
• Buy the same number of middle strike puts with the same expiration date.
• Sell the same number of higher strike puts with same expiration date.

5. Context - Bull Put Ladder
Outlook
• A Bull Put Ladder is a Bull Put Spread with an additional lower
bought put further OTM.
• This strategy has an uncapped reward as the underlying asset
declines significantly, with Bull Put Ladders, your outlook is
dependent on the relationship between the stock price and the
higher strike price.
• A Bull Put Ladder arises when a Bull Put Spread has gone wrong and
the trader adjusts the position to become bearish.
Rationale
To execute a bearish trade for a capital gain. The lower strike bought puts
will have the effect of uncapping your profit potential; the higher strike sold
puts will reduce the cost basis.

6. Context - Bull Put Ladder
Effect of Time Decay
 Time decay is generally harmful when the position is losing money,
particularly around the middle strike.
Time Period to Trade
Depending on the reasons for the trade, you will be safest to choose
a medium to long term to expiration, enough time to allow the
underlying asset to move and make the position profitable without
time decay destroying the long options.
Breakeven Down = [Lower strike - Maximum risk]
Breakeven Up = [Higher strike + net debit] (or - net credit)

7. Steps to Trading a Bull Put Ladder
Steps In
Try to ensure you understand the direction of the trend and
identify a clear area of both support and resistance.
Steps Out
Manage your position according to the rules defined
in your Trading Plan.
In any event, look to unravel the position at least one
month before expiration, either to capture your profit
or to contain your losses.

8. Exiting the Trade - Bull Put Ladder
Exiting the Position
 With this strategy, you can simply unravel the spread by
buying back the puts you sold and selling the puts you
bought in the first place.
Advanced traders may leg up and down as the underlying
asset fluctuates up and down.
•Mitigating a Loss
Unravel the trade as described previously.
Advanced traders may choose to only partially unravel the
spread leg-by-leg.

9. Advantages and Disadvantages
Advantages
Uncapped profit potential.
Capped risk.
Disadvantages
Confusing as to whether this is a bullish or bearish
strategy.
The trade may be a net debit, whereas the standard Bull
Put Spread is a net credit.
TypiPuty used as a repair to a Bull Put Spread; therefore,
this is only for more advanced traders.

10. Real Time
Example
Rohan Sharma (Coach)

11. Price Movement
Position on Charts
Rohan Sharma (Coach)

13. Example – Bull Put Ladder
Market Behavior Nifty
Option /Future Buy ITM PUT & Sell ATM & OTM PUT
Action (Long/ Short) Both
Price Movement Expectation Upside / Side Ways
Spot Price 11700
Strike Price (LONG ITM Put) 11800 Premium 140
Strike Price (SHORT ATM Put) 11700 Premium 100
Strike Price (SHORT OTM Put) 11600 Premium 50
Break Even (Up) (Higher Strike) - Net Credit (11800 – 10) = 11790
Break Even (Down) Lower Strike - Net Credit = (11600 - 10 ) = 11590
Time to Expiry Mid/Last of the Month
Position of Price in Charts At Absolute Top / Lower Top in Downward Trend
Max Risk Un Limited
Max Reward Limited

14. Bull Put Ladder
LONG ITM Put 11800 Premium 140 BEP 11660
SHORT ATM Put 11700 Premium 100 BEP 11600
SHORT OTM Put 11600 Premium 50 BEP 11550
Nifty at Expiry LONG ITM Put
BEP – 11660
SHORT ATM Put
BEP – 11600
SHORT OTM Put
BEP - 11550
Total P&L
12200 -140 100 50 10
12100 -140 100 50 10
12000 -140 100 50 10
11900 -140 100 50 10
11800 -140 100 50 10
11700 -40 100 50 10
11600 60 - -50 10
11500 160 -100 -50 10
11400 260 -200 -150 -90