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 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 Straddle 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 Straddle Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Long Straddle |
| View |  |  |
| Strategy Introduction | 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 | 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 | Protective call works as a protection against the price reversal and is like an insurance policy | 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 | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Call, Put |
| Number of Positions | 2 | 2 |
| Action Needed | Short Position on Buy Call Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Underlying Price - Call Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Put & Call Options Expire Worthlessly |
| Investor Expectation | Market Prices to Go Down | Sharp Market Movement |
| Strategy Summary | Experience Helps | Excellent & Simple |
| Advantages | Unlimited Profit, limited Risk | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | |
| Protective Call Vs Long Combo | ||
| Protective Call Vs Synthetic Call | ||
| Protective Call Vs Long Put | ||
| Protective Call Vs Long Call | ||
| Protective Call Vs Covered Call | ||
| Protective Call Vs Covered Put | ||
| Protective Call Vs Short Call | ||
| Protective Call Vs Short Box | ||
| Protective Call Vs Long Call Condor | ||
| Protective Call Vs Short Call Condor | ||
| Protective Call Vs Box Spread | ||
| Protective Call Vs Short Strangle | ||
| Protective Call Vs Long Strangle | ||
| Protective Call Vs Collar Strategy | ||
| Protective Call Vs Long Straddle | ||
| Protective Call Vs Short Straddle | ||
| Protective Call Vs Long Call Butterfly | ||
| Protective Call Vs Short Call Butterfly | ||
| Protective Call Vs Bear Call Spread | ||
| Protective Call Vs Bear Put Spread | ||
| Protective Call Vs Bull Call Spread | ||
| Protective Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Protective Call option strategies.
However, 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.
At the same time, 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.
