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 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 Straddle 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 Straddle Vs Short Strangle comparison:
| Comparison Aspect | Short Straddle | Short 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 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 | The investor must hold strong views of the steadiness in the market to be involved in the short straddle. | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Experts | Experts |
| Options Traded | Call, Put | Call |
| Number of Positions | 2 | 4 |
| Action Needed | 1 ATM Call, 1 ATM Put | 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 | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net 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 | No Market Movement | Little or No Market Volatility |
| Strategy Summary | Complex | Profits in Stable Market |
| Advantages | Profits in Zero Market Volatility Situation | Higher Range of Profit |
| Disadvantages | Limited Profit, Unlimited Risk | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Short Straddle Vs Short Put | Short Strangle Vs Short Put |
| Short Straddle Vs Long Combo | Short Strangle Vs Long Combo | |
| Short Straddle Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Short Straddle Vs Long Put | Short Strangle Vs Long Put | |
| Short Straddle Vs Long Call | Short Strangle Vs Long Call | |
| Short Straddle Vs Covered Call | Short Strangle Vs Covered Call | |
| Short Straddle Vs Covered Put | Short Strangle Vs Covered Put | |
| Short Straddle Vs Protective Call | Short Strangle Vs Protective Call | |
| Short Straddle Vs Short Box | Short Strangle Vs Short Box | |
| Short Straddle Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Short Straddle Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Short Straddle Vs Box Spread | Short Strangle Vs Box Spread | |
| Short Straddle Vs Short Strangle | Short Strangle Vs Short Call | |
| Short Straddle Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Short Straddle Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Short Straddle Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Short Straddle Vs Short Call | Short Strangle Vs Short Straddle | |
| Short Straddle Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Short Straddle Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Short Straddle Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Short Straddle Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Short Straddle Vs Bull Put Spread | Short Strangle Vs Bull Call Spread | |
| Short Straddle Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Straddle Vs Short 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 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.
The strategy comes with a limited profit potential.
Furthermore, as told above, it also depends on the market situation.
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