A type of option that allows the investor to lock-in gains on the underlying asset or security once predetermined price levels are reached. To illustrate, consider a ladder call option with an underlying price of 20 and a strike price of 22. Its predetermined price "rungs" are at 25 and 30. If the price goes beyond 25 but below 30, the holder would be guaranteed at least a profit of 3 (25 minus the strike price of 22), even if the price subsequently falls below 20 before the expiration date. also called lock-step option and step-lock option.
Related information about ladder option:
- Ladder Option Definition | Investopedia
An option that locks-in gains once the underlying reaches predetermined price levels or "rungs," guaranteeing some profit even if the underlying security falls ...
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Graph showing the expected profit or loss for the long put ladder option strategy in relation. Long Put Ladder Payoff Diagram ...
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Graph showing the expected profit or loss for the long call ladder option strategy in relation. Long Call Ladder Payoff Diagram ...
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Graph showing the expected profit or loss for the short call ladder option strategy in relation. Short Call Ladder Payoff Diagram ...
- What is ladder option? definition and meaning
Definition of ladder option: A type of option that allows the investor to lock-in gains on the underlying asset or security once predetermined price levels are ...
- Ladder Option Definition & Example | InvestingAnswers
We explain the definition of Ladder Option, provide a clear example of how it works and explain why it's an important concept in business, finance & investing.
- Ladder Option - Financial Glossary
Ladder Option. Clear Results. An option on which the strike price can be moved to a more favourable level when the original strike price is reached or overtaken ...
- Ladder Option: Definition from Answers.com
exotic Option that allows the holder to lock-in gains on the underlying security during the life of the option.