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 Short 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 Strangle Vs Short 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 Strangle Vs Short Strangle comparison:
| Comparison Aspect | Long Strangle | Short Strangle |
| View |  |  |
| Strategy Introduction | 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 | The short strangle options trading strategy is an excellent strategy to be deployed when the investor is expecting little to no volatility in the market...more |
| Investor Obligation | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call, Put | Call |
| Number of Positions | 2 | 4 |
| Action Needed | One OTM Put, One OTM Call | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium | Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Both call and put options expire worthlessly | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Market Shows High Volatility | Little or No Market Volatility |
| Strategy Summary | Attractive | Profits in Stable Market |
| Advantages | Less Expensive, Limited Risk, Unlimited Gain | Higher Range of Profit |
| Disadvantages | Price Movement has to be Big | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 2 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Long Strangle Vs Short Put | Short Strangle Vs Short Put |
| Long Strangle Vs Long Combo | Short Strangle Vs Long Combo | |
| Long Strangle Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Long Strangle Vs Long Put | Short Strangle Vs Long Put | |
| Long Strangle Vs Long Call | Short Strangle Vs Long Call | |
| Long Strangle Vs Covered Call | Short Strangle Vs Covered Call | |
| Long Strangle Vs Covered Put | Short Strangle Vs Covered Put | |
| Long Strangle Vs Protective Call | Short Strangle Vs Protective Call | |
| Long Strangle Vs Short Box | Short Strangle Vs Short Box | |
| Long Strangle Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Long Strangle Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Long Strangle Vs Box Spread | Short Strangle Vs Box Spread | |
| Long Strangle Vs Short Strangle | Short Strangle Vs Short Call | |
| Long Strangle Vs Short Call | Short Strangle Vs Long Strangle | |
| Long Strangle Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Long Strangle Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Long Strangle Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Long Strangle Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Long Strangle Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Long Strangle Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Long Strangle Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Long Strangle Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Long Strangle Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Strangle Vs Short Strangle 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.
However, if you are in a neutral market situation and have a limited risk appetite, then Short Strangle is a potential option strategy for you. Generally, this strategy is suitable when you are sure that there is going to be low or no market volatility at all.
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.
