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 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 Straddle 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 Straddle Vs Long Strangle comparison:
| Comparison Aspect | Short Straddle | Long Strangle |
| 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 | 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 | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Experts | Intermediates |
| Options Traded | Call, Put | Call, Put |
| Number of Positions | 2 | 2 |
| Action Needed | 1 ATM Call, 1 ATM Put | One OTM Put, One OTM Call |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net 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 | No Market Movement | Market Shows High Volatility |
| Strategy Summary | Complex | Attractive |
| Advantages | Profits in Zero Market Volatility Situation | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | Limited Profit, Unlimited Risk | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Straddle Vs Short Put | Long Strangle Vs Short Put |
| Short Straddle Vs Long Combo | Long Strangle Vs Long Combo | |
| Short Straddle Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Short Straddle Vs Long Put | Long Strangle Vs Long Put | |
| Short Straddle Vs Long Call | Long Strangle Vs Long Call | |
| Short Straddle Vs Covered Call | Long Strangle Vs Covered Call | |
| Short Straddle Vs Covered Put | Long Strangle Vs Covered Put | |
| Short Straddle Vs Protective Call | Long Strangle Vs Protective Call | |
| Short Straddle Vs Short Box | Long Strangle Vs Short Box | |
| Short Straddle Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Short Straddle Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Short Straddle Vs Box Spread | Long Strangle Vs Box Spread | |
| Short Straddle Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Short Straddle Vs Long Strangle | Long Strangle Vs Short Call | |
| Short Straddle Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Short Straddle Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Short Straddle Vs Short Call | Long Strangle Vs Short Straddle | |
| Short Straddle Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Short Straddle Vs Short Call Butterfly | Long Strangle Vs Short Call Butterfly | |
| Short Straddle Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Short Straddle Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Short Straddle Vs Bull Put Spread | Long Strangle Vs Bull Call Spread | |
| Short Straddle Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Straddle Vs Long Strangle 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.
However, 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.
Furthermore, as told 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.
