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 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 Straddle 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 Straddle Vs Short Straddle comparison:
| Comparison Aspect | Short Straddle | Long Straddle |
| View |  |  |
| Strategy Introduction | 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 | 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 | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. | 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 | Experts | Beginners |
| Options Traded | Call, Put | Call, Put |
| Number of Positions | 2 | 2 |
| Action Needed | 1 ATM Call, 1 ATM Put | 1 ATM Call, 1 ATM Put |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Put & Call Options Expire Worthlessly |
| Investor Expectation | No Market Movement | Sharp Market Movement |
| Strategy Summary | Complex | Excellent & Simple |
| Advantages | Profits in Zero Market Volatility Situation | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | Limited Profit, Unlimited Risk | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Straddle Vs Short Put | Long Straddle Vs Short Put |
| Short Straddle Vs Long Combo | Long Straddle Vs Long Combo | |
| Short Straddle Vs Synthetic Call | Long Straddle Vs Synthetic Call | |
| Short Straddle Vs Long Put | Long Straddle Vs Long Put | |
| Short Straddle Vs Long Call | Long Straddle Vs Long Call | |
| Short Straddle Vs Covered Call | Long Straddle Vs Covered Call | |
| Short Straddle Vs Covered Put | Long Straddle Vs Covered Put | |
| Short Straddle Vs Protective Call | Long Straddle Vs Protective Call | |
| Short Straddle Vs Short Box | Long Straddle Vs Short Box | |
| Short Straddle Vs Long Call Condor | Long Straddle Vs Long Call Condor | |
| Short Straddle Vs Short Call Condor | Long Straddle Vs Short Call Condor | |
| Short Straddle Vs Box Spread | Long Straddle Vs Box Spread | |
| Short Straddle Vs Short Strangle | Long Straddle Vs Short Strangle | |
| Short Straddle Vs Long Strangle | Long Straddle Vs Long Strangle | |
| Short Straddle Vs Collar Strategy | Long Straddle Vs Collar Strategy | |
| Short Straddle Vs Long Straddle | Long Straddle Vs Short Call | |
| Short Straddle Vs Short Call | Long Straddle Vs Short Straddle | |
| Short Straddle Vs Long Call Butterfly | Long Straddle Vs Long Call Butterfly | |
| Short Straddle Vs Short Call Butterfly | Long Straddle Vs Short Call Butterfly | |
| Short Straddle Vs Bear Call Spread | Long Straddle Vs Bear Call Spread | |
| Short Straddle Vs Bear Put Spread | Long Straddle Vs Bear Put Spread | |
| Short Straddle Vs Bull Put Spread | Long Straddle Vs Bull Put Spread | |
| Short Straddle Vs Bull Put Spread | Long Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Short Straddle option strategies.
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.
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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