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 Short Box 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 Short Box 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 Short Box Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Short Box |
| 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 | Short Box involves selling a bull call spread along with a bear put spread, both at the same strike prices and expiration date, so that both the spreads balance each other out and create an arbitrage...more |
| Investor Obligation | Protective call works as a protection against the price reversal and is like an insurance policy | Recognize Put Call Parity distrubance as soon as possible and take positions to capture the movement. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | 1 Short ITM Call, 1 Long OTM Call, 1 Short ITM Put, 1 Long OTM Put |
| Number of Positions | 2 | 4 |
| Action Needed | Short Position on Buy Call Option | Sell bull call spread along with a Bear put spread |
| Risk for You | Limited | None |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Underlying Price - Call Premium | Not Required, Almost No Risk/Loss |
| Investor Intention | Protect himself from extra losses if Price goes Up | Take Positions at the right time and capture the profit. |
| Investor Expectation | Market Prices to Go Down | Profits generated from the strategy will be enough to compensate for the commissions and brokerages paid |
| Strategy Summary | Experience Helps | Complicated |
| Advantages | Unlimited Profit, limited Risk | No Capital Needed, Zero Risk |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Low Profit |
| Market Scenarios - Profit | 1 | 3 |
| Market Scenarios - Loss | 1 | 0 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Short Box Vs Short Put |
| Protective Call Vs Long Combo | Short Box Vs Long Combo | |
| Protective Call Vs Synthetic Call | Short Box Vs Synthetic Call | |
| Protective Call Vs Long Put | Short Box Vs Long Put | |
| Protective Call Vs Long Call | Short Box Vs Long Call | |
| Protective Call Vs Covered Call | Short Box Vs Covered Call | |
| Protective Call Vs Covered Put | Short Box Vs Covered Put | |
| Protective Call Vs Short Call | Short Box Vs Protective Call | |
| Protective Call Vs Short Box | Short Box Vs Short Call | |
| Protective Call Vs Long Call Condor | Short Box Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Short Box Vs Short Call Condor | |
| Protective Call Vs Box Spread | Short Box Vs Box Spread | |
| Protective Call Vs Short Strangle | Short Box Vs Short Strangle | |
| Protective Call Vs Long Strangle | Short Box Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Short Box Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Short Box Vs Long Straddle | |
| Protective Call Vs Short Straddle | Short Box Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Short Box Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Short Box Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Short Box Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Short Box Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Short Box Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Short Box Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Box Vs Protective Call option strategies.
Remember, the Short box strategy has no risk but provides a consistent (and limited) profits to your trades. To add to that, it is a relatively complex strategy too.
At the same time, 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.
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