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 Short 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 Short 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 Short Strangle comparison:
| Comparison Aspect | Short Put | Short 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 short strangle options trading strategy is an excellent strategy to be deployed when the investor is expecting little to no volatility in the market...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. | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Sell Put Option | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Prices go up sharply | Little or No Market Volatility |
| Strategy Summary | Complex & Risky | Profits in Stable Market |
| Advantages | Steady source of income till market remains bullish | Higher Range of Profit |
| Disadvantages | High Risk, Limited Profit | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | Credit Spread |
| More Comparisons | Short Put Vs Long Put | Short Strangle Vs Short Put |
| Short Put Vs Long Combo | Short Strangle Vs Long Combo | |
| Short Put Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Short Put Vs Short Call | Short Strangle Vs Long Put | |
| Short Put Vs Long Call | Short Strangle Vs Long Call | |
| Short Put Vs Covered Call | Short Strangle Vs Covered Call | |
| Short Put Vs Covered Put | Short Strangle Vs Covered Put | |
| Short Put Vs Protective Call | Short Strangle Vs Protective Call | |
| Short Put Vs Short Box | Short Strangle Vs Short Box | |
| Short Put Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Short Put Vs Box Spread | Short Strangle Vs Box Spread | |
| Short Put Vs Short Strangle | Short Strangle Vs Short Call | |
| Short Put Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Short Put Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Short Put Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Short Put Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Short Strangle option strategies.
At the same time, if you are in a neutral market situation and have a limited risk appetite, then Short Strangle is a potential option strategy for you. Generally, this strategy is suitable when you are sure that there is going to be low or no market volatility at all.
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.
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