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 Covered Call Vs Long Strangle 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 Covered Call Vs Long Strangle 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 Covered Call Vs Long Strangle comparison:
| Comparison Aspect | Long Strangle | Covered Call |
| View |  |  |
| Strategy Introduction | The long strangle strategy helps the trader to take advantage of the volatility in the market. It is a trend neutral strategy, so the trader does not need to be certain of the direction...more | In a Covered Call Strategy, the trader holds a long position in a security and at the same time, he writes the call options on the same security to generate income through premiums...more |
| Investor Obligation | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. | Pay the difference as a loss in case the stock value falls beyond the investor set price. |
| Market Position | Neutral | Moderately Bullish or Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call, Put | Call |
| Number of Positions | 2 | 2 (Underlying & Call) |
| Action Needed | One OTM Put, One OTM Call | Sell Call Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium | Strike Price MINUS Premium |
| Investor Intention | Both call and put options expire worthlessly | Make Money from Premium Received |
| Investor Expectation | Market Shows High Volatility | Limited Price Movements |
| Strategy Summary | Attractive | Cautious |
| Advantages | Less Expensive, Limited Risk, Unlimited Gain | Generates Steady Income |
| Disadvantages | Price Movement has to be Big | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Strangle Vs Short Put | Covered Call Vs Short Put |
| Long Strangle Vs Long Combo | Covered Call Vs Long Combo | |
| Long Strangle Vs Synthetic Call | Covered Call Vs Synthetic Call | |
| Long Strangle Vs Long Put | Covered Call Vs Short Call | |
| Long Strangle Vs Long Call | Covered Call Vs Long Call | |
| Long Strangle Vs Covered Call | Covered Call Vs Long Put | |
| Long Strangle Vs Covered Put | Covered Call Vs Covered Put | |
| Long Strangle Vs Protective Call | Covered Call Vs Protective Call | |
| Long Strangle Vs Short Box | Covered Call Vs Short Box | |
| Long Strangle Vs Long Call Condor | Covered Call Vs Long Call Condor | |
| Long Strangle Vs Short Call Condor | Covered Call Vs Short Call Condor | |
| Long Strangle Vs Box Spread | Covered Call Vs Box Spread | |
| Long Strangle Vs Short Strangle | Covered Call Vs Short Strangle | |
| Long Strangle Vs Short Call | Covered Call Vs Long Strangle | |
| Long Strangle Vs Collar Strategy | Covered Call Vs Collar Strategy | |
| Long Strangle Vs Long Straddle | Covered Call Vs Long Straddle | |
| Long Strangle Vs Short Straddle | Covered Call Vs Short Straddle | |
| Long Strangle Vs Long Call Butterfly | Covered Call Vs Long Call Butterfly | |
| Long Strangle Vs Short Call Butterfly | Covered Call Vs Short Call Butterfly | |
| Long Strangle Vs Bear Call Spread | Covered Call Vs Bear Call Spread | |
| Long Strangle Vs Bear Put Spread | Covered Call Vs Bear Put Spread | |
| Long Strangle Vs Bull Call Spread | Covered Call Vs Bull Put Spread | |
| Long Strangle Vs Bull Put Spread | Covered Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Covered Call Vs Long Strangle option strategies.
At the same time, if you are in a neutral market situation and are looking for unlimited profits from your share market trades, then you can opt to go for the Long Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
However, if the market is moderately bullish or neutral with a high-risk appetite with a limitation on the profit – then you can opt for a covered call option strategy.
Furthermore, as told above, it also depends on the market situation.
In case you are looking to trade in options segment or share market in general, let us assist you in that. Just fill the form below and we will take you to the steps ahead.
