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 Strangle 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 Strangle 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 Strangle comparison:
| Comparison Aspect | Long Straddle | Long Strangle |
| View |  |  |
| Strategy Introduction | 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 | The long strangle strategy helps the trader to take advantage of the volatility in the market. It is a trend neutral strategy, so the trader does not need to be certain of the direction...more |
| Investor Obligation | 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. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Call, Put | Call, Put |
| Number of Positions | 2 | 2 |
| Action Needed | 1 ATM Call, 1 ATM Put | One OTM Put, One OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium |
| Investor Intention | Put & Call Options Expire Worthlessly | Both call and put options expire worthlessly |
| Investor Expectation | Sharp Market Movement | Market Shows High Volatility |
| Strategy Summary | Excellent & Simple | Attractive |
| Advantages | Uni-Directional Profit, Unlimited Gains | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | High Premium | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Straddle Vs Short Put | Long Strangle Vs Short Put |
| Long Straddle Vs Long Combo | Long Strangle Vs Long Combo | |
| Long Straddle Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Long Straddle Vs Long Put | Long Strangle Vs Long Put | |
| Long Straddle Vs Long Call | Long Strangle Vs Long Call | |
| Long Straddle Vs Covered Call | Long Strangle Vs Covered Call | |
| Long Straddle Vs Covered Put | Long Strangle Vs Covered Put | |
| Long Straddle Vs Protective Call | Long Strangle Vs Protective Call | |
| Long Straddle Vs Short Box | Long Strangle Vs Short Box | |
| Long Straddle Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Long Straddle Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Long Straddle Vs Box Spread | Long Strangle Vs Box Spread | |
| Long Straddle Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Long Straddle Vs Long Strangle | Long Strangle Vs Short Call | |
| Long Straddle Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Long Straddle Vs Short Call | Long Strangle Vs Long Straddle | |
| Long Straddle Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Long Straddle Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Long Straddle Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Long Straddle Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Long Straddle Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Long Straddle Vs Bull Put Spread | Long Strangle Vs Bull Call Spread | |
| Long Straddle Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Long Strangle option strategies.
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 Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
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.
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