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 Straddle 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 Straddle 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 Straddle Vs Long Call Butterfly comparison:
| Comparison Aspect | Long Call Butterfly | Long Straddle |
| View |  |  |
| Strategy Introduction | 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 | Long Straddle comes into play when the trader expects the market to move sharply, however, the direction of the movement cannot be predicted. The purpose of the strategy to allow the traders to benefit from volatile markets...more |
| Investor Obligation | Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations. | The trader should be able to trade based on his/her conviction that the markets will move, without being concerned about the direction of the movement. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Call, Put |
| Number of Positions | 4 | 2 |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | 1 ATM Call, 1 ATM Put |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Investor Intention | Options expire worthless except the one with the lower strike price | Put & Call Options Expire Worthlessly |
| Investor Expectation | No Movement in Price of the Underlying Asset | Sharp Market Movement |
| Strategy Summary | Effective | Excellent & Simple |
| Advantages | Profits in Low Market Volatility, Limited Risks | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | Limited Profit, High Premium | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Call Butterfly Vs Short Put | Long Straddle Vs Short Put |
| Long Call Butterfly Vs Long Combo | Long Straddle Vs Long Combo | |
| Long Call Butterfly Vs Synthetic Call | Long Straddle Vs Synthetic Call | |
| Long Call Butterfly Vs Long Put | Long Straddle Vs Long Put | |
| Long Call Butterfly Vs Long Call | Long Straddle Vs Long Call | |
| Long Call Butterfly Vs Covered Call | Long Straddle Vs Covered Call | |
| Long Call Butterfly Vs Covered Put | Long Straddle Vs Covered Put | |
| Long Call Butterfly Vs Protective Call | Long Straddle Vs Protective Call | |
| Long Call Butterfly Vs Short Box | Long Straddle Vs Short Box | |
| Long Call Butterfly Vs Long Call Condor | Long Straddle Vs Long Call Condor | |
| Long Call Butterfly Vs Short Call Condor | Long Straddle Vs Short Call Condor | |
| Long Call Butterfly Vs Box Spread | Long Straddle Vs Box Spread | |
| Long Call Butterfly Vs Short Strangle | Long Straddle Vs Short Strangle | |
| Long Call Butterfly Vs Long Strangle | Long Straddle Vs Long Strangle | |
| Long Call Butterfly Vs Collar Strategy | Long Straddle Vs Collar Strategy | |
| Long Call Butterfly Vs Long Straddle | Long Straddle Vs Short Call | |
| Long Call Butterfly Vs Short Straddle | Long Straddle Vs Short Straddle | |
| Long Call Butterfly Vs Short Call | Long Straddle Vs Long Call Butterfly | |
| Long Call Butterfly Vs Short Call Butterfly | Long Straddle Vs Short Call Butterfly | |
| Long Call Butterfly Vs Bear Call Spread | Long Straddle Vs Bear Call Spread | |
| Long Call Butterfly Vs Bear Put Spread | Long Straddle Vs Bear Put Spread | |
| Long Call Butterfly Vs Bull Call Spread | Long Straddle Vs Bull Put Spread | |
| Long Call Butterfly Vs Bull Put Spread | Long Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Long Call Butterfly option strategies.
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.
But the profit you get using this strategy is also limited in scope.
However, if you are in a neutral market situation and are looking for unlimited profits from your share market trades, then you can opt to go for the Long Straddle strategy.
There is a limited amount of risk involved as well, however, there are good chances of high profits if the strategy is executed well.
Furthermore, as told 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.
