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 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 Put 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 Put Vs Long Strangle comparison:
| Comparison Aspect | Short Put | Long Strangle |
| 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 | 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 | 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. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Put Option | One OTM Put, One OTM Call |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS 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 go up sharply | Market Shows High Volatility |
| Strategy Summary | Complex & Risky | Attractive |
| Advantages | Steady source of income till market remains bullish | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | High Risk, Limited Profit | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Long Strangle Vs Short Put |
| Short Put Vs Long Combo | Long Strangle Vs Long Combo | |
| Short Put Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Short Put Vs Short Call | Long Strangle Vs Long Put | |
| Short Put Vs Long Call | Long Strangle Vs Long Call | |
| Short Put Vs Covered Call | Long Strangle Vs Covered Call | |
| Short Put Vs Covered Put | Long Strangle Vs Covered Put | |
| Short Put Vs Protective Call | Long Strangle Vs Protective Call | |
| Short Put Vs Short Box | Long Strangle Vs Short Box | |
| Short Put Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Short Put Vs Box Spread | Long Strangle Vs Box Spread | |
| Short Put Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Short Put Vs Long Strangle | Long Strangle Vs Short Call | |
| Short Put Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Short Put Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Short Put Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Long Strangle Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Long Strangle 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 Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
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.
