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 Call Butterfly 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 Short Call Butterfly 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 Short Call Butterfly Vs Synthetic Call comparison:
| Comparison Aspect | Short Call Butterfly | Synthetic Call |
| View |  |  |
| Strategy Introduction | Short Call Butterfly is the options strategy which is used when the trader expects a lot of volatility in the market. It is the opposite of the long call butterfly, in which the investor expects...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 | It is necessary that the strike prices of the in-the-money and out-of-the-money call options are equidistant from the at-the-money call options, and all the options have the same expiration date. | Stay with the position |
| Market Position | Neutral | Bullish |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Put |
| Number of Positions | 4 | 2 (Underlying + Put) |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | Holds a long position in an underlying asset and a put option on the same stock |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium | Underlying Price + Put Premium |
| Investor Intention | Let Options Expire Worthlessly | Save Transaction Costs, Stay Protected from downward market movement. |
| Investor Expectation | High Market Volatility | Prices of the Assets to Go Up |
| Strategy Summary | Profit in Unsure Market Situations | Profitable |
| Advantages | Limited Exposure, Low Investment | Dividends on Stocks, Limited Risk, Unlimited Profit |
| Disadvantages | Low Returns, Requires Significant Market Movement | Chances of loss if the underlying goes down |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Call Butterfly Vs Short Put | Synthetic Call Vs Short Put |
| Short Call Butterfly Vs Long Combo | Synthetic Call Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Synthetic Call Vs Short Call | |
| Short Call Butterfly Vs Long Put | Synthetic Call Vs Long Put | |
| Short Call Butterfly Vs Long Call | Synthetic Call Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Synthetic Call Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Synthetic Call Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Synthetic Call Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Synthetic Call Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Synthetic Call Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Synthetic Call Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Synthetic Call Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Synthetic Call Vs Short Strangle | |
| Short Call Butterfly Vs Long Strangle | Synthetic Call Vs Long Strangle | |
| Short Call Butterfly Vs Collar Strategy | Synthetic Call Vs Collar Strategy | |
| Short Call Butterfly Vs Long Straddle | Synthetic Call Vs Long Straddle | |
| Short Call Butterfly Vs Short Straddle | Synthetic Call Vs Short Straddle | |
| Short Call Butterfly Vs Long Call Butterfly | Synthetic Call Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Synthetic Call Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Synthetic Call Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Synthetic Call Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Synthetic Call Vs Bull Call Spread | |
| Short Call Butterfly Vs Bull Put Spread | Synthetic Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Butterfly Vs Synthetic Call option strategies.
Furthermore, if you as a trader are expecting price movement (without any idea of the direction) within a neutral market momentum – then short call butterfly is an optimal strategy for you.
There is a limited amount of risk involved and you can expect limited profit only in this options strategy.
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.
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