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 Protective Call Vs Box Spread 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 Protective Call Vs Box Spread 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 Protective Call Vs Box Spread comparison:
| Comparison Aspect | Protective Call | Box Spread |
| 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 | Box Spread is an arbitrage strategy in which two complementary positions are taken that balance out the risk of each other. This makes the box spread an almost risk-free strategy...more |
| Investor Obligation | Protective call works as a protection against the price reversal and is like an insurance policy | The trader has the obligation to keep the positions open till they reach their respective expirations. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Call | Call, Put |
| Number of Positions | 2 | 4 |
| Action Needed | Short Position on Buy Call Option | 1 Long ITM Call, 1 Short OTM Call, 1 Long ITM Put, 1 Short OTM Put |
| Risk for You | Limited | None |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Underlying Price - Call Premium | NA |
| Investor Intention | Protect himself from extra losses if Price goes Up | Choose the Correct Stike Prices |
| Investor Expectation | Market Prices to Go Down | Short-term demand shifts of the options in the market. |
| Strategy Summary | Experience Helps | Complicated |
| Advantages | Unlimited Profit, limited Risk | Risk Free, Direction Neutral |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Limited Profit, High Margin Maintenance, Positions cannot be closed before expiry. |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 0 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Box Spread Vs Short Put |
| Protective Call Vs Long Combo | Box Spread Vs Long Combo | |
| Protective Call Vs Synthetic Call | Box Spread Vs Synthetic Call | |
| Protective Call Vs Long Put | Box Spread Vs Long Put | |
| Protective Call Vs Long Call | Box Spread Vs Long Call | |
| Protective Call Vs Covered Call | Box Spread Vs Covered Call | |
| Protective Call Vs Covered Put | Box Spread Vs Covered Put | |
| Protective Call Vs Short Call | Box Spread Vs Protective Call | |
| Protective Call Vs Short Box | Box Spread Vs Short Box | |
| Protective Call Vs Long Call Condor | Box Spread Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Box Spread Vs Short Call Condor | |
| Protective Call Vs Box Spread | Box Spread Vs Short Call | |
| Protective Call Vs Short Strangle | Box Spread Vs Short Strangle | |
| Protective Call Vs Long Strangle | Box Spread Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Box Spread Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Box Spread Vs Long Straddle | |
| Protective Call Vs Short Straddle | Box Spread Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Box Spread Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Box Spread Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Box Spread Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Box Spread Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Box Spread Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Box Spread Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Protective Call Vs Box Spread option strategies.
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 consistent but limited profits for your share market trades, then you can opt to go for the Box spread strategy.
The strategy comes with a limited profit potential.
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.
