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 Short 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 Short 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 Short Straddle comparison:
| Comparison Aspect | Short Call | Short 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 | Using the short straddle strategy, the investor makes an upfront gain through the premiums collected by writing the call and put options. The investor expects that there...more |
| Investor Obligation | The trader has the obligation to buy the stock at the predetermined price at the time of expiration. | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Experts | Experts |
| 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 | Unlimited |
| Profit Potential | Limited | Limited |
| 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 | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down Sharply | No Market Movement |
| Strategy Summary | Risky | Complex |
| Advantages | Profits in Bearish Market | Profits in Zero Market Volatility Situation |
| Disadvantages | Limited Profit, Unlimited Risk | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 2 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Short Straddle Vs Short Put |
| Short Call Vs Long Combo | Short Straddle Vs Long Combo | |
| Short Call Vs Synthetic Call | Short Straddle Vs Synthetic Call | |
| Short Call Vs Long Put | Short Straddle Vs Long Put | |
| Short Call Vs Long Call | Short Straddle Vs Long Call | |
| Short Call Vs Covered Call | Short Straddle Vs Covered Call | |
| Short Call Vs Covered Put | Short Straddle Vs Covered Put | |
| Short Call Vs Protective Call | Short Straddle Vs Protective Call | |
| Short Call Vs Short Box | Short Straddle Vs Short Box | |
| Short Call Vs Long Call Condor | Short Straddle Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Short Straddle Vs Short Call Condor | |
| Short Call Vs Box Spread | Short Straddle Vs Box Spread | |
| Short Call Vs Short Strangle | Short Straddle Vs Short Strangle | |
| Short Call Vs Long Strangle | Short Straddle Vs Long Strangle | |
| Short Call Vs Collar Strategy | Short Straddle Vs Collar Strategy | |
| Short Call Vs Long Straddle | Short Straddle Vs Long Straddle | |
| Short Call Vs Short Straddle | Short Straddle Vs Short Call | |
| Short Call Vs Long Call Butterfly | Short Straddle Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Short Straddle Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Short Straddle Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Short Straddle Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Short Straddle Vs Bull Put Spread | |
| Short Call Vs Bull Put Spread | Short Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Short 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 an experienced trader and are in a neutral market situation, then Short Straddle is one of the options you can look out for.
There is a high amount of risk involved as well – thus, you have to be very sure of the point that the market has no volatility. Otherwise, stakes can be very high.
Furthermore, as said above, it also depends on the market situation.
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