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 Vs Long Straddle 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 Vs Long Straddle 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 Vs Long Straddle comparison:
| Comparison Aspect | Short Call | Long Straddle |
| View |  |  |
| Strategy Introduction | Short Call is used when the trader expects that the price of the underlying asset will go down sharply, he shorts a call. If the price of the asset goes down, the strategy generates profit. However, if the price...more | Long Straddle comes into play when the trader expects the market to move sharply, however, the direction of the movement cannot be predicted. The purpose of the strategy to allow the traders to benefit from volatile markets...more |
| Investor Obligation | The trader has the obligation to buy the stock at the predetermined price at the time of expiration. | The trader should be able to trade based on his/her conviction that the markets will move, without being concerned about the direction of the movement. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Experts | Beginners |
| Options Traded | Call | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Call Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price PLUS Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Put & Call Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down Sharply | Sharp Market Movement |
| Strategy Summary | Risky | Excellent & Simple |
| Advantages | Profits in Bearish Market | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | Limited Profit, Unlimited Risk | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Long Straddle Vs Short Put |
| Short Call Vs Long Combo | Long Straddle Vs Long Combo | |
| Short Call Vs Synthetic Call | Long Straddle Vs Synthetic Call | |
| Short Call Vs Long Put | Long Straddle Vs Long Put | |
| Short Call Vs Long Call | Long Straddle Vs Long Call | |
| Short Call Vs Covered Call | Long Straddle Vs Covered Call | |
| Short Call Vs Covered Put | Long Straddle Vs Covered Put | |
| Short Call Vs Protective Call | Long Straddle Vs Protective Call | |
| Short Call Vs Short Box | Long Straddle Vs Short Box | |
| Short Call Vs Long Call Condor | Long Straddle Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Long Straddle Vs Short Call Condor | |
| Short Call Vs Box Spread | Long Straddle Vs Box Spread | |
| Short Call Vs Short Strangle | Long Straddle Vs Short Strangle | |
| Short Call Vs Long Strangle | Long Straddle Vs Long Strangle | |
| Short Call Vs Collar Strategy | Long Straddle Vs Collar Strategy | |
| Short Call Vs Long Straddle | Long Straddle Vs Short Call | |
| Short Call Vs Short Straddle | Long Straddle Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Long Straddle Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Long Straddle Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Long Straddle Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Long Straddle Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Long Straddle Vs Bull Put Spread | |
| Short Call Vs Bull Put Spread | Long Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Long Straddle option strategies.
As mentioned above, if you are looking to put minimal initial investment and have a high-risk appetite, then Short Call options strategy can work wonders for you.
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 Straddle strategy.
There is a limited amount of risk involved as well, however, there are good chances of high profits if the strategy is executed well.
Furthermore, as said above, it also depends on the market situation.
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