The Short Put Ladder Strategy and its Application in Trading and Hedging

The first aim of this paper is to propose another way of an option strategy formation known as Short Put Ladder, describe the functions of profit in their analytical forms and propose an optimal algorithm for the use of this strategy in trading. The other goal is to propose the application of the Short Put Ladder Strategy in hedging against a price drop of the underlying asset and compare the result with the results of hedging using the known Long Combo option strategy.