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 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 Put 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 Put Vs Long Straddle comparison:
| Comparison Aspect | Short Put | Long Straddle |
| 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 | 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 | 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 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 | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Beginners |
| Options Traded | Put | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Put Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS 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 go up sharply | Sharp Market Movement |
| Strategy Summary | Complex & Risky | Excellent & Simple |
| Advantages | Steady source of income till market remains bullish | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | High Risk, Limited Profit | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Long Straddle Vs Short Put |
| Short Put Vs Long Combo | Long Straddle Vs Long Combo | |
| Short Put Vs Synthetic Call | Long Straddle Vs Synthetic Call | |
| Short Put Vs Short Call | Long Straddle Vs Long Put | |
| Short Put Vs Long Call | Long Straddle Vs Long Call | |
| Short Put Vs Covered Call | Long Straddle Vs Covered Call | |
| Short Put Vs Covered Put | Long Straddle Vs Covered Put | |
| Short Put Vs Protective Call | Long Straddle Vs Protective Call | |
| Short Put Vs Short Box | Long Straddle Vs Short Box | |
| Short Put Vs Long Call Condor | Long Straddle Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Long Straddle Vs Short Call Condor | |
| Short Put Vs Box Spread | Long Straddle Vs Box Spread | |
| Short Put Vs Short Strangle | Long Straddle Vs Short Strangle | |
| Short Put Vs Long Strangle | Long Straddle Vs Long Strangle | |
| Short Put Vs Collar Strategy | Long Straddle Vs Collar Strategy | |
| Short Put Vs Long Straddle | Long Straddle Vs Short Call | |
| Short Put Vs Short Straddle | Long Straddle Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Long Straddle Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Long Straddle Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Long Straddle Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Long Straddle Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Long Straddle Vs Bull Put Spread | |
| Short Put Vs Bull Put Spread | Long Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Long Straddle option strategies.
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.
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.
