Ladder Option

Dictionary Says

Definition of 'Ladder Option'

An option that locks-in gains once the underlying reaches predetermined price levels or "rungs," guaranteeing some profit even if the underlying security falls back below these levels before the option expires. 
Investopedia Says

Investopedia explains 'Ladder Option'

For example, consider a ladder call option with an underlying price of 50, with a strike price of 55 and rungs at 60, 65 and 70. If the underlying price reached 62, the profit would be locked-in to be at least 5 (60-55); however, if the underlying reached 71, then the profit  would be locked-in to being at least 15 (70-55), even if the underlying falls below these levels before the expiration date. 

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Asset-Or-Nothing Call Option

    A derivative ...
  2. Asset-or-Nothing Put Option

    An option payoff ...
  3. Barrier Option

    A type of option ...
  4. Cash-Or-Nothing Call

    An exotic option ...
  5. Cash-or-Nothing Put

    An exotic option ...
  6. Exotic Option

    An option that ...
  7. Knock-In Option

    A latent option ...
  8. Knock-Out Option

    An option with a ...
  9. Option

    A financial ...
  10. Vanilla Option

    A financial ...

Articles Of Interest

  1. Options Basics Tutorial

    Discover the world of options, from primary concepts to how options work and why you might use them.
  2. Going Long On Calls

    Learn how to buy calls and then sell or exercise them to earn a profit.
  3. Prices Plunging? Buy A Put!

    You can make money on a falling stock. Find out how going long on a put can lead to profits.
  4. What do all of the letters in a stock option ticker symbol mean?

  5. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  6. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  7. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  8. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.
  9. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  10. Simplify Your Portfolio

    Faced with an overabundance of choices, many investors forget to stick to the basics.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center