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 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 Call 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 Call Vs Protective Call comparison:
| Comparison Aspect | Short Call | Protective Call |
| 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 | 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 |
| Investor Obligation | The trader has the obligation to buy the stock at the predetermined price at the time of expiration. | Protective call works as a protection against the price reversal and is like an insurance policy |
| Market Position | Bearish | Bearish |
| Strategy Level Suitable for | Experts | Intermediates |
| Options Traded | Call | Call |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Call Option | Short Position on Buy Call Option |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price PLUS Premium | Underlying Price - Call Premium |
| Investor Intention | Let Options Expire Worthlessly | Protect himself from extra losses if Price goes Up |
| Investor Expectation | Prices of Assets Go Down Sharply | Market Prices to Go Down |
| Strategy Summary | Risky | Experience Helps |
| Advantages | Profits in Bearish Market | Unlimited Profit, limited Risk |
| Disadvantages | Limited Profit, Unlimited Risk | Reduced Profits due to the Premium paid for Call Option. |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | Synthetic Long Put |
| More Comparisons | Short Call Vs Short Put | Protective Call Vs Short Put |
| Short Call Vs Long Combo | Protective Call Vs Long Combo | |
| Short Call Vs Synthetic Call | Protective Call Vs Synthetic Call | |
| Short Call Vs Long Put | Protective Call Vs Long Put | |
| Short Call Vs Long Call | Protective Call Vs Long Call | |
| Short Call Vs Covered Call | Protective Call Vs Covered Call | |
| Short Call Vs Covered Put | Protective Call Vs Covered Put | |
| Short Call Vs Protective Call | Protective Call Vs Short Call | |
| Short Call Vs Short Box | Protective Call Vs Short Box | |
| Short Call Vs Long Call Condor | Protective Call Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Protective Call Vs Short Call Condor | |
| Short Call Vs Box Spread | Protective Call Vs Box Spread | |
| Short Call Vs Short Strangle | Protective Call Vs Short Strangle | |
| Short Call Vs Long Strangle | Protective Call Vs Long Strangle | |
| Short Call Vs Collar Strategy | Protective Call Vs Collar Strategy | |
| Short Call Vs Long Straddle | Protective Call Vs Long Straddle | |
| Short Call Vs Short Straddle | Protective Call Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Protective Call Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Protective Call Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Protective Call Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Protective Call Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Protective Call Vs Bull Call Spread | |
| Short Call Vs Bull Put Spread | Protective Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Protective Call 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 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.
Furthermore, as said above, it also depends on the market situation.
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