Bear Call Ladder

This is a vertical spread consisting of a short position in (usually) a close to ATM call option with a strike price K1, a long position in an OTM call option with a strike price K2, and a long position in another OTM call option with a higher strike price K3 . A bear call ladder typically arises when a bear call spread (a bearish strategy) goes wrong (the stock trades higher), so the trader buys another OTM call option (with the strike price K3) to adjust the position to bullish.