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 Long Call Vs Short Straddle 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 Long Call Vs Short Straddle 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 Long Call Vs Short Straddle comparison:
| Comparison Aspect | Long Call | Short Straddle |
| View |  |  |
| Strategy Introduction | In Long Call Strategy, the trader enters into a contract to buy a call option when he is bullish towards the market. The trader anticipates that the price of the security will go up in the future. However, he does not want to take the risk of buying the security outright...more | Using the short straddle strategy, the investor makes an upfront gain through the premiums collected by writing the call and put options. The investor expects that there...more |
| Investor Obligation | The trader has the right to buy a security at a future date at a predefined price. The term long itself means buying a security or buying an option. | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Buy Call Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Limited to Premium | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price PLUS Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net Premium |
| Investor Intention | Exercise Option if Profitable, Let it go otherwise | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Up Sharply | No Market Movement |
| Strategy Summary | Attractive | Complex |
| Advantages | Unlimited Profits, Limited Loss, Low Investment | Profits in Zero Market Volatility Situation |
| Disadvantages | Premium may eat up the Profits | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 2 |
| Also called as | NA | NA |
| More Comparisons | Long Call Vs Long Put | Short Straddle Vs Short Put |
| Long Call Vs Long Combo | Short Straddle Vs Long Combo | |
| Long Call Vs Synthetic Call | Short Straddle Vs Synthetic Call | |
| Long Call Vs Short Call | Short Straddle Vs Long Put | |
| Long Call Vs Short Put | Short Straddle Vs Long Call | |
| Long Call Vs Covered Call | Short Straddle Vs Covered Call | |
| Long Call Vs Covered Put | Short Straddle Vs Covered Put | |
| Long Call Vs Protective Call | Short Straddle Vs Protective Call | |
| Long Call Vs Short Box | Short Straddle Vs Short Box | |
| Long Call Vs Long Call Condor | Short Straddle Vs Long Call Condor | |
| Long Call Vs Short Call Condor | Short Straddle Vs Short Call Condor | |
| Long Call Vs Box Spread | Short Straddle Vs Box Spread | |
| Long Call Vs Short Strangle | Short Straddle Vs Short Strangle | |
| Long Call Vs Long Strangle | Short Straddle Vs Long Strangle | |
| Long Call Vs Collar Strategy | Short Straddle Vs Collar Strategy | |
| Long Call Vs Long Straddle | Short Straddle Vs Long Straddle | |
| Long Call Vs Short Straddle | Short Straddle Vs Short Call | |
| Long Call Vs Long Call Butterfly | Short Straddle Vs Long Call Butterfly | |
| Long Call Vs Short Call Butterfly | Short Straddle Vs Short Call Butterfly | |
| Long Call Vs Bear Call Spread | Short Straddle Vs Bear Call Spread | |
| Long Call Vs Bear Put Spread | Short Straddle Vs Bear Put Spread | |
| Long Call Vs Bull Call Spread | Short Straddle Vs Bull Put Spread | |
| Long Call Vs Bull Put Spread | Short Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Call Vs Short Straddle option strategies.
As mentioned above, if you are in a Bullish market situation and want to make unlimited profits on your trades, then Long Call is one of the options trading strategies you can opt for. The risk involved in this strategy is more than limited and thus, the strategy can only work for higher profits if you have the experience to run similar strategies in the past.
At the same time, if you are an experienced trader and are in a neutral market situation, then Short Straddle is one of the options you can look out for.
There is a high amount of risk involved as well – thus, you have to be very sure of the point that the market has no volatility. Otherwise, stakes can be very high.
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