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 Protective Call 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 Protective Call 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 Protective Call comparison:
| Comparison Aspect | Long Put | Protective Call |
| 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 | A Protective call combines an existing short position on an underlying asset with buying of call options, to safeguard against the price rise against the expectations...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. | Protective call works as a protection against the price reversal and is like an insurance policy |
| Market Position | Bearish | Bearish |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call |
| Number of Positions | 1 | 2 |
| Action Needed | Buy Put Option | Short Position on Buy Call Option |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Underlying Price - Call Premium |
| Investor Intention | Let Options Expire Worthlessly | Protect himself from extra losses if Price goes Up |
| Investor Expectation | Prices of Assets Go Down | Market Prices to Go Down |
| Strategy Summary | Effective | Experience Helps |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Unlimited Profit, limited Risk |
| Disadvantages | High Premium | Reduced Profits due to the Premium paid for Call Option. |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Synthetic Long Put |
| More Comparisons | Long Put Vs Short Put | Protective Call Vs Short Put |
| Long Put Vs Long Combo | Protective Call Vs Long Combo | |
| Long Put Vs Synthetic Call | Protective Call Vs Synthetic Call | |
| Long Put Vs Short Call | Protective Call Vs Long Put | |
| Long Put Vs Long Call | Protective Call Vs Long Call | |
| Long Put Vs Covered Call | Protective Call Vs Covered Call | |
| Long Put Vs Covered Put | Protective Call Vs Covered Put | |
| Long Put Vs Protective Call | Protective Call Vs Short Call | |
| Long Put Vs Short Box | Protective Call Vs Short Box | |
| Long Put Vs Long Call Condor | Protective Call Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Protective Call Vs Short Call Condor | |
| Long Put Vs Box Spread | Protective Call Vs Box Spread | |
| Long Put Vs Short Strangle | Protective Call Vs Short Strangle | |
| Long Put Vs Long Strangle | Protective Call Vs Long Strangle | |
| Long Put Vs Collar Strategy | Protective Call Vs Collar Strategy | |
| Long Put Vs Long Straddle | Protective Call Vs Long Straddle | |
| Long Put Vs Short Straddle | Protective Call Vs Short Straddle | |
| Long Put Vs Long Call Butterfly | Protective Call Vs Long Call Butterfly | |
| Long Put Vs Short Call Butterfly | Protective Call Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Protective Call Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Protective Call Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Protective Call Vs Bull Call Spread | |
| Long Put Vs Bull Put Spread | Protective Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Put Vs Protective Call 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 looking at a bearish market momentum and want to take a limited risk with an eye on unlimited profits, then the protective call is the strategy you must be using.
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.
