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 Put Vs Long 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 Long Put Vs Long 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 Long Put Vs Long Call Butterfly comparison:
| Comparison Aspect | Long Put | Long Call Butterfly |
| View |  |  |
| Strategy Introduction | Long Put is used when the trader has a bearish view on the market and expects the price of the asset to go down. He will then wait for the prices to go down and then exercise his option...more | Long Call Butterfly is the options trading strategy which is used when the trader has a neutral outlook towards the market and expects the prices to remain range-bound...more |
| Investor Obligation | The strategy gives the trader a right to buy the put option on expiry, but not the obligation. The trader may choose to buy the option or not. | Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Buy Put Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Options expire worthless except the one with the lower strike price |
| Investor Expectation | Prices of Assets Go Down | No Movement in Price of the Underlying Asset |
| Strategy Summary | Effective | Effective |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Profits in Low Market Volatility, Limited Risks |
| Disadvantages | High Premium | Limited Profit, High Premium |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Put Vs Short Put | Long Call Butterfly Vs Short Put |
| Long Put Vs Long Combo | Long Call Butterfly Vs Long Combo | |
| Long Put Vs Synthetic Call | Long Call Butterfly Vs Synthetic Call | |
| Long Put Vs Short Call | Long Call Butterfly Vs Long Put | |
| Long Put Vs Long Call | Long Call Butterfly Vs Long Call | |
| Long Put Vs Covered Call | Long Call Butterfly Vs Covered Call | |
| Long Put Vs Covered Put | Long Call Butterfly Vs Covered Put | |
| Long Put Vs Protective Call | Long Call Butterfly Vs Protective Call | |
| Long Put Vs Short Box | Long Call Butterfly Vs Short Box | |
| Long Put Vs Long Call Condor | Long Call Butterfly Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Long Call Butterfly Vs Short Call Condor | |
| Long Put Vs Box Spread | Long Call Butterfly Vs Box Spread | |
| Long Put Vs Short Strangle | Long Call Butterfly Vs Short Strangle | |
| Long Put Vs Long Strangle | Long Call Butterfly Vs Long Strangle | |
| Long Put Vs Collar Strategy | Long Call Butterfly Vs Collar Strategy | |
| Long Put Vs Long Straddle | Long Call Butterfly Vs Long Straddle | |
| Long Put Vs Short Straddle | Long Call Butterfly Vs Short Straddle | |
| Long Put Vs Long Call Butterfly | Long Call Butterfly Vs Short Call | |
| Long Put Vs Short Call Butterfly | Long Call Butterfly Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Long Call Butterfly Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Long Call Butterfly Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Long Call Butterfly Vs Bull Call Spread | |
| Long Put Vs Bull Put Spread | Long Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Put Vs Long Call Butterfly option strategies.
As mentioned above, if you are a beginner level trader and are looking for unlimited profits with limited risk – it makes sense for you to employ the Long Put Option Strategy. At the same time, if you are in a neutral market situation and want to take a limited risk, then Long Call Butterfly is one of the options trading strategies you can look out for.
The profit you get using this strategy is also limited in scope.
At the same time, be aware of all the related aspects (like the ones listed above) and then make a choice for yourself.
Furthermore, as said 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.
