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 Strangle Vs Protective Call 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 Strangle Vs Protective Call 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 Strangle Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Short Strangle |
| View |  |  |
| Strategy Introduction | A Protective call combines an existing short position on an underlying asset with buying of call options, to safeguard against the price rise against the expectations...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 | Protective call works as a protection against the price reversal and is like an insurance policy | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call |
| Number of Positions | 2 | 4 |
| Action Needed | Short Position on Buy Call Option | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Underlying Price - Call Premium | Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Market Prices to Go Down | Little or No Market Volatility |
| Strategy Summary | Experience Helps | Profits in Stable Market |
| Advantages | Unlimited Profit, limited Risk | Higher Range of Profit |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | Credit Spread |
| More Comparisons | Protective Call Vs Short Put | Short Strangle Vs Short Put |
| Protective Call Vs Long Combo | Short Strangle Vs Long Combo | |
| Protective Call Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Protective Call Vs Long Put | Short Strangle Vs Long Put | |
| Protective Call Vs Long Call | Short Strangle Vs Long Call | |
| Protective Call Vs Covered Call | Short Strangle Vs Covered Call | |
| Protective Call Vs Covered Put | Short Strangle Vs Covered Put | |
| Protective Call Vs Short Call | Short Strangle Vs Protective Call | |
| Protective Call Vs Short Box | Short Strangle Vs Short Box | |
| Protective Call Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Protective Call Vs Box Spread | Short Strangle Vs Box Spread | |
| Protective Call Vs Short Strangle | Short Strangle Vs Short Call | |
| Protective Call Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Protective Call Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Protective Call Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Strangle Vs Protective Call option strategies.
If you are looking at a bearish market momentum and want to take a limited risk with an eye on unlimited profits, then the protective call is the strategy you must be using.
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.
The strategy comes with a limited profit potential.
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