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 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 Put 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 Put Vs Short Straddle comparison:
| Comparison Aspect | Long Put | Short Straddle |
| 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 | 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 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. | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Buy Put Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down | No Market Movement |
| Strategy Summary | Effective | Complex |
| Advantages | Unlimited Profits, Profits possible even in Bearish Market | Profits in Zero Market Volatility Situation |
| Disadvantages | High Premium | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 2 |
| Also called as | NA | NA |
| More Comparisons | Long Put Vs Short Put | Short Straddle Vs Short Put |
| Long Put Vs Long Combo | Short Straddle Vs Long Combo | |
| Long Put Vs Synthetic Call | Short Straddle Vs Synthetic Call | |
| Long Put Vs Short Call | Short Straddle Vs Long Put | |
| Long Put Vs Long Call | Short Straddle Vs Long Call | |
| Long Put Vs Covered Call | Short Straddle Vs Covered Call | |
| Long Put Vs Covered Put | Short Straddle Vs Covered Put | |
| Long Put Vs Protective Call | Short Straddle Vs Protective Call | |
| Long Put Vs Short Box | Short Straddle Vs Short Box | |
| Long Put Vs Long Call Condor | Short Straddle Vs Long Call Condor | |
| Long Put Vs Short Call Condor | Short Straddle Vs Short Call Condor | |
| Long Put Vs Box Spread | Short Straddle Vs Box Spread | |
| Long Put Vs Short Strangle | Short Straddle Vs Short Strangle | |
| Long Put Vs Long Strangle | Short Straddle Vs Long Strangle | |
| Long Put Vs Collar Strategy | Short Straddle Vs Collar Strategy | |
| Long Put Vs Long Straddle | Short Straddle Vs Long Straddle | |
| Long Put Vs Short Straddle | Short Straddle Vs Short Call | |
| Long Put Vs Long Call Butterfly | Short Straddle Vs Long Call Butterfly | |
| Long Put Vs Short Call Butterfly | Short Straddle Vs Short Call Butterfly | |
| Long Put Vs Bear Call Spread | Short Straddle Vs Bear Call Spread | |
| Long Put Vs Bear Put Spread | Short Straddle Vs Bear Put Spread | |
| Long Put Vs Bull Call Spread | Short Straddle Vs Bull Put Spread | |
| Long Put Vs Bull Put Spread | Short Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Put Vs Short Straddle 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 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.
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.
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