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 Put 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 Put 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 Put Vs Long Strangle comparison:
| Comparison Aspect | Long Strangle | Covered Put |
| 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 | Covered Put is the options trading strategy which involves shorting the underlying asset, along with selling a put option on the same number of shares. By doing this, the trader is able to...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. | If the price of the stock goes below the strike price of the put option, the put option will be expired and will have to be brought back. |
| Market Position | Neutral | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call, Put | Put |
| Number of Positions | 2 | 2 |
| Action Needed | One OTM Put, One OTM Call | Short on Underlying and Short Put |
| 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 | Futures Price + Premium Received |
| Investor Intention | Both call and put options expire worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Market Shows High Volatility | Prices of Assets Go Down Slightly |
| Strategy Summary | Attractive | Steady Profits with Caution |
| Advantages | Less Expensive, Limited Risk, Unlimited Gain | Income Generation, Reduced Losses |
| Disadvantages | Price Movement has to be Big | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 2 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Long Strangle Vs Short Put | Covered Put Vs Short Put |
| Long Strangle Vs Long Combo | Covered Put Vs Long Combo | |
| Long Strangle Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Long Strangle Vs Long Put | Covered Put Vs Long Put | |
| Long Strangle Vs Long Call | Covered Put Vs Long Call | |
| Long Strangle Vs Covered Call | Covered Put Vs Covered Call | |
| Long Strangle Vs Covered Put | Covered Put Vs Short Call | |
| Long Strangle Vs Protective Call | Covered Put Vs Protective Call | |
| Long Strangle Vs Short Box | Covered Put Vs Short Box | |
| Long Strangle Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Long Strangle Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Long Strangle Vs Box Spread | Covered Put Vs Box Spread | |
| Long Strangle Vs Short Strangle | Covered Put Vs Short Strangle | |
| Long Strangle Vs Short Call | Covered Put Vs Long Strangle | |
| Long Strangle Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Long Strangle Vs Long Straddle | Covered Put Vs Long Straddle | |
| Long Strangle Vs Short Straddle | Covered Put Vs Short Straddle | |
| Long Strangle Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Long Strangle Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Long Strangle Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Long Strangle Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Long Strangle Vs Bull Call Spread | Covered Put Vs Bull Call Spread | |
| Long Strangle Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Covered Put 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.
If you are looking at a bearish market momentum and are open towards high risk with consistent but limited profits, then Covered Put is suitable for your trading style.
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.
