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What is an option ladder?

In one line: An option ladder spreads several short options on one stock across different strike prices or expiration dates, instead of selling them all at one strike and date.

Trading glossary · Updated 2026-10-26

How it works

If you sell several contracts on one stock, you can put them all at one strike and one date. Or you can stagger them. That stagger is a ladder.

• By strike: sell puts at $45, $43 and $41 instead of three at $45.
• By date: sell one put expiring in 2 weeks, one in 4, one in 6.
• Both: different strikes and different dates.

The point is to stop one moment from deciding everything. A ladder by date spreads your expiries. A ladder by strike gives you several prices to buy or sell at.

One note on the name: "ladder" can also mean a different trade, a ladder spread that buys one option and sells two more at other strikes. That one has its own risks. This page is about staggering simple sales.

An example (hypothetical)

You'd buy up to 300 shares of XYZ, now at $50 (an illustration, not a trade idea). You have about $13,500 set aside.

• Plan A: three $45 puts at $1.00 each. You collect $300.
• Plan B, a ladder: one $45 put at $1.00, one $43 at $0.60, one $41 at $0.35. You collect $195.

The ladder collects less when nothing happens. In a drop, it buys fewer shares at the top and more at lower prices. It still loses money when the stock falls far. It just loses less, and the shares come in at a lower average. A math example, not a promise.

Why it matters for sellers

In the wheel strategy, a ladder turns one big bet on one strike into a few smaller ones. It works for covered calls too: sell calls at a few strikes, so not all your shares are called away at the lowest price.

The costs are real. Lower strikes pay less. Each contract pays its own Per-contract fee. And the far strikes may have wide spreads, so check Options liquidity on each one. A ladder only makes sense if you'd be fine owning, or selling, at every rung.

Questions