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 Synthetic 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 Protective Call Vs Synthetic 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 Protective Call Vs Synthetic Call comparison:
| Comparison Aspect | Protective Call | Synthetic Call |
| 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 | Synthetic Call is an options strategy in which an underlying asset is combined with a put option to protect against depreciation in the value of the underlying asset. The overall effect is similar to...more |
| Investor Obligation | Protective call works as a protection against the price reversal and is like an insurance policy | Stay with the position |
| Market Position | Bearish | Bullish |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Put |
| Number of Positions | 2 | 2 (Underlying + Put) |
| Action Needed | Short Position on Buy Call Option | Holds a long position in an underlying asset and a put option on the same stock |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Underlying Price - Call Premium | Underlying Price + Put Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Save Transaction Costs, Stay Protected from downward market movement. |
| Investor Expectation | Market Prices to Go Down | Prices of the Assets to Go Up |
| Strategy Summary | Experience Helps | Profitable |
| Advantages | Unlimited Profit, limited Risk | Dividends on Stocks, Limited Risk, Unlimited Profit |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Chances of loss if the underlying goes down |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Synthetic Call Vs Short Put |
| Protective Call Vs Long Combo | Synthetic Call Vs Long Combo | |
| Protective Call Vs Synthetic Call | Synthetic Call Vs Short Call | |
| Protective Call Vs Long Put | Synthetic Call Vs Long Put | |
| Protective Call Vs Long Call | Synthetic Call Vs Long Call | |
| Protective Call Vs Covered Call | Synthetic Call Vs Covered Call | |
| Protective Call Vs Covered Put | Synthetic Call Vs Covered Put | |
| Protective Call Vs Short Call | Synthetic Call Vs Protective Call | |
| Protective Call Vs Short Box | Synthetic Call Vs Short Box | |
| Protective Call Vs Long Call Condor | Synthetic Call Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Synthetic Call Vs Short Call Condor | |
| Protective Call Vs Box Spread | Synthetic Call Vs Box Spread | |
| Protective Call Vs Short Strangle | Synthetic Call Vs Short Strangle | |
| Protective Call Vs Long Strangle | Synthetic Call Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Synthetic Call Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Synthetic Call Vs Long Straddle | |
| Protective Call Vs Short Straddle | Synthetic Call Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Synthetic Call Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Synthetic Call Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Synthetic Call Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Synthetic Call Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Synthetic Call Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Synthetic Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Protective Call Vs Synthetic Call 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.
If you are looking at a bearish market momentum and are open towards a limited risk with a potential of unlimited profits, then Synthetic Call options strategy is definitely a positive go for you.
Be aware of all the related aspects (like the ones listed above) and then make a choice for yourself.
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.
