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 Strangle 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 Strangle 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 Strangle Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Long Strangle |
| 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 | 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 | Protective call works as a protection against the price reversal and is like an insurance policy | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Call | Call, Put |
| Number of Positions | 2 | 2 |
| Action Needed | Short Position on Buy Call Option | One OTM Put, One OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Underlying Price - Call Premium | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Both call and put options expire worthlessly |
| Investor Expectation | Market Prices to Go Down | Market Shows High Volatility |
| Strategy Summary | Experience Helps | Attractive |
| Advantages | Unlimited Profit, limited Risk | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Long Strangle Vs Short Put |
| Protective Call Vs Long Combo | Long Strangle Vs Long Combo | |
| Protective Call Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Protective Call Vs Long Put | Long Strangle Vs Long Put | |
| Protective Call Vs Long Call | Long Strangle Vs Long Call | |
| Protective Call Vs Covered Call | Long Strangle Vs Covered Call | |
| Protective Call Vs Covered Put | Long Strangle Vs Covered Put | |
| Protective Call Vs Short Call | Long Strangle Vs Protective Call | |
| Protective Call Vs Short Box | Long Strangle Vs Short Box | |
| Protective Call Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Protective Call Vs Box Spread | Long Strangle Vs Box Spread | |
| Protective Call Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Protective Call Vs Long Strangle | Long Strangle Vs Short Call | |
| Protective Call Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Protective Call Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Long Strangle Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Strangle Vs Protective Call option strategies.
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 Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
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.
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.
