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 Put Vs Box Spread 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 Put Vs Box Spread 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 Put Vs Box Spread comparison:
| Comparison Aspect | Short Put | Box Spread |
| View |  |  |
| Strategy Introduction | The short put strategy is used when the investor is bullish towards the market and expects the prices to go up. He then sells the put option and makes a profit if...more | Box Spread is an arbitrage strategy in which two complementary positions are taken that balance out the risk of each other. This makes the box spread an almost risk-free strategy...more |
| Investor Obligation | Investor is obligated to sell the shares at the predetermined price, at the time of expiry, if the buyer of the put option chooses to exercise his option. | The trader has the obligation to keep the positions open till they reach their respective expirations. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call, Put |
| Number of Positions | 1 | 4 |
| Action Needed | Sell Put Option | 1 Long ITM Call, 1 Short OTM Call, 1 Long ITM Put, 1 Short OTM Put |
| Risk for You | Unlimited | None |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | NA |
| Investor Intention | Let Options Expire Worthlessly | Choose the Correct Stike Prices |
| Investor Expectation | Prices go up sharply | Short-term demand shifts of the options in the market. |
| Strategy Summary | Complex & Risky | Complicated |
| Advantages | Steady source of income till market remains bullish | Risk Free, Direction Neutral |
| Disadvantages | High Risk, Limited Profit | Limited Profit, High Margin Maintenance, Positions cannot be closed before expiry. |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 0 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Box Spread Vs Short Put |
| Short Put Vs Long Combo | Box Spread Vs Long Combo | |
| Short Put Vs Synthetic Call | Box Spread Vs Synthetic Call | |
| Short Put Vs Short Call | Box Spread Vs Long Put | |
| Short Put Vs Long Call | Box Spread Vs Long Call | |
| Short Put Vs Covered Call | Box Spread Vs Covered Call | |
| Short Put Vs Covered Put | Box Spread Vs Covered Put | |
| Short Put Vs Protective Call | Box Spread Vs Protective Call | |
| Short Put Vs Short Box | Box Spread Vs Short Box | |
| Short Put Vs Long Call Condor | Box Spread Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Box Spread Vs Short Call Condor | |
| Short Put Vs Box Spread | Box Spread Vs Short Call | |
| Short Put Vs Short Strangle | Box Spread Vs Short Strangle | |
| Short Put Vs Long Strangle | Box Spread Vs Long Strangle | |
| Short Put Vs Collar Strategy | Box Spread Vs Collar Strategy | |
| Short Put Vs Long Straddle | Box Spread Vs Long Straddle | |
| Short Put Vs Short Straddle | Box Spread Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Box Spread Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Box Spread Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Box Spread Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Box Spread Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Box Spread Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Box Spread Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Box Spread option strategies.
At the same time, if you are in a neutral market situation and are looking for consistent but limited profits for your share market trades, then you can opt to go for the Box spread strategy.
However, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited.
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.
