What is a ladder option in Binary trading? – Definition & examples

A ladder option is a type of binary option with a tiered payout structure. It entails forecasting whether the price of a specific asset will hit particular price points within the specified time period. 

These strike prices, resembling rungs on a ladder, offer varying payouts. If predictions are correct and the price reaches or surpasses a strike price, traders receive the associated payout. 

However, if prices do not reach these levels, the option may expire worthless, leading to potential losses. Ladder options provide opportunities for more precise predictions and potentially higher profits but come with added complexity and risk. Very few binary options brokers offer them.


How does a ladder option work?

A ladder option provides traders with a one-of-a-kind way to speculate on a particular asset’s price fluctuation over a given period. Here is how it works:

  • Tiered payout structure

A ladder option features a tiered or ladder-like payout structure. This structure consists of multiple predetermined price levels, often referred to as “strike prices.” These strike prices are established at periodic periods in relation to and below the asset’s present market value.

  • Prediction of price movements

Traders using ladder options must predict whether the price of the underlying asset will reach or surpass each of these predefined strike prices before the option’s expiration.

  • Payouts at different levels

Each strike price level is associated with a certain payout amount. If a trader’s prediction is correct and the asset’s price reaches or exceeds a particular strike price, they receive the associated payout.

  • Outcome scenarios

There are several possible outcome scenarios for a ladder option:

If the asset’s price reaches one or more of the strike prices predicted by the trader, they receive the corresponding payouts.

If the price falls short of the expected strike prices, the contract for the option may expire worth nothing, causing the trader to lose money.

  • Flexibility and precision

Ladder options provide traders with the flexibility to make more precise predictions about the asset’s price movements compared to traditional binary options. They can benefit from a variety of probable payment ranges.

  • Risk and complexity

However, the tiered payout structure of ladder options also introduces complexity and higher risk. Traders need to anticipate multiple price levels to achieve profits accurately, and losses can accumulate if predictions are incorrect.

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Example of a ladder option trade:

Let us illustrate how a ladder option works with an example:


You are interested in trading a ladder option on the price of Company XYZ’s stock, which is currently trading at $100 per share.

Ladder levels:

The ladder option you are considering has three strike price levels, each with its associated payout:

Level 1: Company XYZ’s stock price reaches $105 – Payout: $100

Level 2: Company XYZ’s stock price reaches $110 – Payout: $200

Level 3: Company XYZ’s stock price reaches $115 – Payout: $300

Your prediction:

You believe that company XYZ’s stock price will experience significant upward momentum within the specified time frame, so you decide to purchase a ladder option based on the following predictions:

  • You predict that the stock price will reach $105 within the option’s duration.
  • You also predict that the stock price will reach $110.
  • Lastly, you predict that the stock price will reach $115.

Outcome Scenarios:

Scenario 1 (Level 1): If Company XYZ’s stock price indeed reaches $105 during the option’s duration; you receive a payout of $100 as per your prediction.

Scenario 2 (Level 2): If the stock price continues to rise and reaches $110, you receive an additional $200 payout on top of the $100 from Scenario 1, totaling $300.

Scenario 3 (Level 3): In the best-case scenario, if the stock price reaches $115, you receive an additional $300 payout, making your total payout $600.

Outcome summary:

  • If the stock price reaches only $105, you receive $100.
  • If it reaches both $105 and $110, you receive $300.
  • If it reaches all three levels, you receive the maximum payout of $600.

This example demonstrates how ladder options provide multiple opportunities for profit based on various price levels but also come with the risk of losing the entire investment if price predictions are not met. Traders must carefully assess market conditions and their confidence in price movements before trading ladder options.

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Alternatives to ladder options:

Here are some types of binary options other than the ladder option:

  • Call/put options (high/low options)

These are the simplest and most common types of binary options. Traders forecast if the trading price of a specific asset will rise (Call) or fall (Put) over a given time period.

  • One-touch options

Traders speculate the possibility that the price of the fundamental asset will at least once hit a certain target price before the contract expires.

  • No-touch options

This is the opposite of One-Touch options. Traders speculate that the value of the actual asset will not fall below a certain level prior to the contract expiration.

  • Range options (boundary options)

Traders forecast if the value of an asset will remain inside a certain price range or break out of it within a given time period.

  • 60-second options (short-term options)

These options have very short expiration times, often just 60 seconds. Traders forecast if the price will be greater or lower than it is now during this brief period.

  • Double no-touch options

Traders anticipate that the price of the actual asset will reach neither of two predefined price levels before the option expires.

  • Double one-touch options

Traders anticipate that the value of the underlying asset will reach one of two predefined levels until the option expires.

These are some of the various binary options types available to traders, each with its unique characteristics and payout structures. The choice of which type to use depends on a trader’s market analysis and trading strategy.

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Pros and cons of ladder options:


  • Tiered payouts
  • Precision
  • Flexibility
  • Risk management


  • Complexity
  • Higher risk
  • Limited availability
  • Market volatility
  • Higher capital requirement

Pros of ladder options

  • Tiered payouts

Ladder options offer a tiered payout structure, providing traders with multiple potential payout levels. This allows the opportunity to earn higher profits compared to traditional binary options.

  • Precision

Traders can make more precise predictions about price movements since Ladder options require forecasting whether the price will reach specific strike prices.

  • Flexibility

Ladder options offer flexibility in terms of strike prices and payout potential. Traders can select from a variety of ladder levels based on their appetite for risk and market expectations.

  • Risk management

Ladder options can be employed to minimize risks and implement hedging techniques. Traders can use Ladder options to protect themselves from any possible losses in their present positions.

Cons of ladder options

  • Complexity

Ladder options are more complex than standard binary options, which may make them less suitable for beginners. Traders need to predict multiple price levels to profit accurately.

  • Higher risk

The tiered payout structure introduces higher risk. If price predictions are not met at any of the levels, the option may expire worthless, resulting in losses that can accumulate with each level.

  • Limited availability

Not all binary options brokers offer Ladder options. Traders may have limited choices when it comes to selecting a broker that provides this type of option.

  • Market volatility

Ladder options are sensitive to market volatility. Sudden and unpredictable price movements can make it challenging to achieve the desired price levels.

  • Higher capital requirement

Due to the potential for multiple payouts, traders may need a larger capital base to engage in Ladder options effectively.

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Like all financial derivatives, Ladder options carry inherent risks. If the value of the asset does not reach or exceed any of the predefined strike prices, the contract expires worth nothing, causing the trader to lose money. If the market swings contrary to the trader’s expectations, the structured payout system can result in severe losses.

Which broker offers ladder options?

Two well-known binary options brokers that have historically offered ladder options include:

  • Binary.com

Binary.com is a reputable broker known for offering a variety of binary options, including ladder options. They provide an easy-to-use trading interface as well as access to a variety of financial marketplaces.

  • Deriv (formerly Binary.com)

Deriv, which was previously known as Binary.com, also offered ladder options. They are part of the same company and may continue to provide ladder options under the new brand name.

Please keep in mind that the availability of ladder options, as well as the services offered by binary options brokers, can change over time.


Ladder options offer traders an interesting alternative to bet on the price fluctuations of the actual assets. With their tiered payout structure, they offer the potential for substantial profits, but they also come with higher risks and complexity. Traders should thoroughly understand the mechanics, pros, and cons of ladder options before incorporating them into their trading strategies.

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Frequently asked questions:

Are ladder options suitable for beginners?

Ladder options are more complicated and risky, thus rendering them less ideal for newcomers. It is advisable to gain experience with more straightforward binary options before exploring ladder options.

How can I determine the ladder option’s strike prices?

The broker typically predefines strike prices for ladder options. Traders should analyze the market and asset in question to make informed predictions.

Can ladder options be used for hedging?

Yes, ladder options can be used for hedging strategies. Traders can use ladder options to safeguard themselves against any possible losses in current positions.

Do all binary options brokers offer ladder options?

No, not all brokers offer ladder options. You should check with your chosen broker to see if they provide this type of binary option.

What is the typical duration of a ladder option?

A ladder option’s duration might vary based on the brokerage firm and the particular trade. The typical duration ranges from seconds to hours or even days.

About the author

Percival Knight
I have been an experienced Binary Options trader for more than ten years. Mainly, I trade 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

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