Long Call Ladder (Christmas Tree)
Description
A call ratio spread extended with a third, higher strike: buying a lower call and selling one call at each of two higher strikes.
Setup
- Buy one call at a lower strike.
- Sell one call at a middle strike.
- Sell one call at a higher strike, same expiry.
Context
Used when a rise up to the middle strike is expected, extending the profit plateau of a straight bull call spread by giving up more upside to collect more up-front credit.
Risk Profile
Maximum gain is reached between the middle and highest strike. Above the highest strike, the extra uncovered short call creates loss that grows without bound.
Pros
- Wide plateau of maximum profit.
- Lower, or negative, cost of entry than a bull call spread.
- Benefits from time decay on the two short calls.
Cons
- Uncapped risk above the highest strike.
- Needs active management if the underlying rallies hard through all three strikes.
Effect of Time
Time decay generally helps, since there are more short options than long ones.
Effect of Volatility
A rise in implied volatility generally hurts the position.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Long | Call | 1 | $84000.0000 | 24 Sep 2026 | $527.5973 | $590.9089 | $25.3247 |
| Short | Call | 1 | $84500.0000 | 24 Sep 2026 | $198.3766 | $177.2727 | $24.7971 |
| Short | Call | 1 | $85000.0000 | 24 Sep 2026 | $71.7532 | $59.0909 | $8.9692 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $83000.0000 | $0.0000 | -$257.4675 | -100.0% |
| $84000.0000 | $0.0000 | -$257.4675 | -100.0% |
| $84257.4675 breakeven | $257.4675 | $0.0000 | +0.0% |
| $84415.5600 current | $415.5600 | $158.0925 | +61.4% |
| $84500.0000 | $500.0000 | $242.5325 | +94.2% |
| $85000.0000 | $500.0000 | $242.5325 | +94.2% |
| $85242.5325 breakeven | $257.4675 | $0.0000 | +0.0% |
| $86000.0000 | -$500.0000 | -$757.4675 | -294.2% |