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 Short Put 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 Short Put 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 Short Put comparison:
| Comparison Aspect | Long Put | Short Put |
| 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 | The short put strategy is used when the investor is bullish towards the market and expects the prices to go up. He then sells the put option and makes a profit if...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. | Investor is obligated to sell the shares at the predetermined price, at the time of expiry, if the buyer of the put option chooses to exercise his option. |
| Market Position | Bearish | Bullish |
| Strategy Level Suitable for | Beginners | Beginners |
| Options Traded | Put | Put |
| Number of Positions | 1 | 1 |
| Action Needed | Buy Put Option | Sell Put Option |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Strike Price MINUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets go down | Prices go up sharply |
| Strategy Summary | Effective | Complex & Risky |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Steady source of income till market remains bullish |
| Disadvantages | High Premium | High Risk, Limited Profit |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 2 |
| Also called as | NA | Naked Put or Uncovered Put |
| More Comparisons | Long Put Vs Short Put | Short Put Vs Long Put |
| Long Put Vs Long Combo | Short Put Vs Long Combo | |
| Long Put Vs Synthetic Call | Short Put Vs Synthetic Call | |
| Long Put Vs Short Call | Short Put Vs Short Call | |
| Long Put Vs Long Call | Short Put Vs Long Call | |
| Long Put Vs Covered Call | Short Put Vs Covered Call | |
| Long Put Vs Covered Put | Short Put Vs Covered Put | |
| Long Put Vs Protective Call | Short Put Vs Protective Call | |
| Long Put Vs Short Box | Short Put Vs Short Box | |
| Long Put Vs Long Call Condor | Short Put Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Short Put Vs Short Call Condor | |
| Long Put Vs Box Spread | Short Put Vs Box Spread | |
| Long Put Vs Short Strangle | Short Put Vs Short Strangle | |
| Long Put Vs Long Strangle | Short Put Vs Long Strangle | |
| Long Put Vs Collar Strategy | Short Put Vs Collar Strategy | |
| Long Put Vs Long Straddle | Short Put Vs Long Straddle | |
| Long Put Vs Short Straddle | Short Put Vs Short Straddle | |
| Long Put Vs Long Call Butterfly | Short Put Vs Long Call Butterfly | |
| Long Put Vs Short Call Butterfly | Short Put Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Short Put Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Short Put Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Short Put Vs Bull Call Spread | |
| Long Put Vs Bull Put Spread | Short Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Put Vs Short Put 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 Long Put Option Strategy. However, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited.
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.
