Investment dictionary

LADDER OPTION

Ladder Option: translation

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.

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.

  1. ladder option—Ladder Option translation An option on which the strike price can be moved to a more favourable level when the original strike price is reached or overtaken by the spot r...Financial and business terms