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:
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. Related Terms:
Asset-or-Nothing Call Option
Asset-or-Nothing Put Option
Barrier Option
Cash-or-Nothing Call
Cash-or-Nothing Put
Exotic Option
Knock-In Option
Knock-Out Option
Option
Vanilla Option |