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 Straddle Vs Covered Put 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 Straddle Vs Covered Put 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 Straddle Vs Covered Put comparison:
| Comparison Aspect | Short Straddle | Covered Put |
| View |  |  |
| Strategy Introduction | 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 | Covered Put is the options trading strategy which involves shorting the underlying asset, along with selling a put option on the same number of shares. By doing this, the trader is able to...more |
| Investor Obligation | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. | If the price of the stock goes below the strike price of the put option, the put option will be expired and will have to be brought back. |
| Market Position | Neutral | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | Call, Put | Put |
| Number of Positions | 2 | 2 |
| Action Needed | 1 ATM Call, 1 ATM Put | Short on Underlying and Short Put |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net Premium | Futures Price + Premium Received |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | No Market Movement | Prices of Assets Go Down Slightly |
| Strategy Summary | Complex | Steady Profits with Caution |
| Advantages | Profits in Zero Market Volatility Situation | Income Generation, Reduced Losses |
| Disadvantages | Limited Profit, Unlimited Risk | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Short Straddle Vs Short Put | Covered Put Vs Short Put |
| Short Straddle Vs Long Combo | Covered Put Vs Long Combo | |
| Short Straddle Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Short Straddle Vs Long Put | Covered Put Vs Long Put | |
| Short Straddle Vs Long Call | Covered Put Vs Long Call | |
| Short Straddle Vs Covered Call | Covered Put Vs Covered Call | |
| Short Straddle Vs Covered Put | Covered Put Vs Short Call | |
| Short Straddle Vs Protective Call | Covered Put Vs Protective Call | |
| Short Straddle Vs Short Box | Covered Put Vs Short Box | |
| Short Straddle Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Short Straddle Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Short Straddle Vs Box Spread | Covered Put Vs Box Spread | |
| Short Straddle Vs Short Strangle | Covered Put Vs Short Strangle | |
| Short Straddle Vs Long Strangle | Covered Put Vs Long Strangle | |
| Short Straddle Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Short Straddle Vs Long Straddle | Covered Put Vs Long Straddle | |
| Short Straddle Vs Short Call | Covered Put Vs Short Straddle | |
| Short Straddle Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Short Straddle Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Short Straddle Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Short Straddle Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Short Straddle Vs Bull Put Spread | Covered Put Vs Bull Call Spread | |
| Short Straddle Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Straddle Vs Covered Put option strategies.
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.
If you are looking at a bearish market momentum and are open towards high risk with consistent but limited profits, then Covered Put is suitable for your trading style.
Furthermore, as told above, it also depends on the market situation.
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