When it comes to Options Trading, there are different complexities involved in terms of choosing a specific strategy that works the best for you.
At the same time, each strategy has its own set of advantages as well as limitations, thus making the concept of options trading even more challenging. Thus, in case you are looking to fit a particular strategy in your option trades, just check few areas before you make a choice.
In this detailed comparison of Bear Put Spread Vs Short Call Butterfly options trading strategies, we will be looking at the below-mentioned aspects and more:
- Current Market Position
- Your Risk Appetite
- Your Trading Experience
- Profit Potential
- Intention and Expectation of a trader
- Break-even point of your trade
Apart from the Bear Put Spread Vs Short Call Butterfly strategies, there are more than 25 comparisons of each of these strategies with other option strategies. With all these comparisons, you should be able to filter the ones that work the best for you.
Here is the detailed Bear Put Spread Vs Short Call Butterfly comparison:
| Comparison Aspect | Bear Put Spread | Short Call Butterfly |
| View |  |  |
| Strategy Introduction | Bear Put Spread is a type of vertical spread wherein buys a put option hoping to make a profit due to the market decline, and at the same time writes another put option with...more | Short Call Butterfly is the options strategy which is used when the trader expects a lot of volatility in the market. It is the opposite of the long call butterfly, in which the investor expects...more |
| Investor Obligation | If the prices fall as expected, the trader can make profits and limit his losses, but if the prices fall far more than expected then the trader won’t be able to make any profit. | It is necessary that the strike prices of the in-the-money and out-of-the-money call options are equidistant from the at-the-money call options, and all the options have the same expiration date. |
| Market Position | Moderately Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Put | Call |
| Number of Positions | 2 | 4 |
| Action Needed | Buy ITM Put, Sell OTM Put | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price of Long Put MINUS Net Premium | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium |
| Investor Intention | Let Put Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Market Prices to go Down | High Market Volatility |
| Strategy Summary | Limit Your Losses | Profit in Unsure Market Situations |
| Advantages | Limited Risk, Capped Losses | Limited Exposure, Low Investment |
| Disadvantages | Limited Profit | Low Returns, Requires Significant Market Movement |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | NA |
| More Comparisons | Bear Put Spread Vs Short Put | Short Call Butterfly Vs Short Put |
| Bear Put Spread Vs Long Combo | Short Call Butterfly Vs Long Combo | |
| Bear Put Spread Vs Synthetic Call | Short Call Butterfly Vs Synthetic Call | |
| Bear Put Spread Vs Long Put | Short Call Butterfly Vs Long Put | |
| Bear Put Spread Vs Long Call | Short Call Butterfly Vs Long Call | |
| Bear Put Spread Vs Covered Call | Short Call Butterfly Vs Covered Call | |
| Bear Put Spread Vs Covered Put | Short Call Butterfly Vs Covered Put | |
| Bear Put Spread Vs Protective Call | Short Call Butterfly Vs Protective Call | |
| Bear Put Spread Vs Short Box | Short Call Butterfly Vs Short Box | |
| Bear Put Spread Vs Long Call Condor | Short Call Butterfly Vs Long Call Condor | |
| Bear Put Spread Vs Short Call Condor | Short Call Butterfly Vs Short Call Condor | |
| Bear Put Spread Vs Box Spread | Short Call Butterfly Vs Box Spread | |
| Bear Put Spread Vs Short Strangle | Short Call Butterfly Vs Short Strangle | |
| Bear Put Spread Vs Long Strangle | Short Call Butterfly Vs Long Strangle | |
| Bear Put Spread Vs Collar Strategy | Short Call Butterfly Vs Collar Strategy | |
| Bear Put Spread Vs Long Straddle | Short Call Butterfly Vs Long Straddle | |
| Bear Put Spread Vs Short Straddle | Short Call Butterfly Vs Short Straddle | |
| Bear Put Spread Vs Long Call Butterfly | Short Call Butterfly Vs Long Call Butterfly | |
| Bear Put Spread Vs Short Call Butterfly | Short Call Butterfly Vs Short Call | |
| Bear Put Spread Vs Bear Call Spread | Short Call Butterfly Vs Bear Call Spread | |
| Bear Put Spread Vs Short Call | Short Call Butterfly Vs Bear Put Spread | |
| Bear Put Spread Vs Bull Call Spread | Short Call Butterfly Vs Bull Call Spread | |
| Bear Put Spread Vs Bull Put Spread | Short Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Bear Put Spread Vs Short Call Butterfly option strategies.
Furthermore, if you as a trader are expecting price movement (without any idea of the direction) within a neutral market momentum – then short call butterfly is an optimal strategy for you.
There is a limited amount of risk involved and you can expect limited profit only in this options strategy.
At the same time, if you are looking to make some money from a market decline and can take some basic risk – then Bear Put Spread options strategy makes sense to you.
This needs to be known that the profit you get using both of these strategies is also limited in scope.
Furthermore, as told above, it also depends on the market situation.
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