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 Strangle 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 Strangle 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 Strangle comparison:
| Comparison Aspect | Short Call | Long Strangle |
| 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 | The long strangle strategy helps the trader to take advantage of the volatility in the market. It is a trend neutral strategy, so the trader does not need to be certain of the direction...more |
| Investor Obligation | The trader has the obligation to buy the stock at the predetermined price at the time of expiration. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Experts | Intermediates |
| Options Traded | Call | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Call Option | One OTM Put, One OTM Call |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price PLUS Premium | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Both call and put options expire worthlessly |
| Investor Expectation | Prices of Assets Go Down Sharply | Market Shows High Volatility |
| Strategy Summary | Risky | Attractive |
| Advantages | Profits in Bearish Market | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | Limited Profit, Unlimited Risk | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Long Strangle Vs Short Put |
| Short Call Vs Long Combo | Long Strangle Vs Long Combo | |
| Short Call Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Short Call Vs Long Put | Long Strangle Vs Long Put | |
| Short Call Vs Long Call | Long Strangle Vs Long Call | |
| Short Call Vs Covered Call | Long Strangle Vs Covered Call | |
| Short Call Vs Covered Put | Long Strangle Vs Covered Put | |
| Short Call Vs Protective Call | Long Strangle Vs Protective Call | |
| Short Call Vs Short Box | Long Strangle Vs Short Box | |
| Short Call Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Short Call Vs Box Spread | Long Strangle Vs Box Spread | |
| Short Call Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Short Call Vs Long Strangle | Long Strangle Vs Short Call | |
| Short Call Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Short Call Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Short Call Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Long Strangle Vs Bull Call Spread | |
| Short Call Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Long Strangle 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 Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
Furthermore, as said 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.
