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 Short Call Butterfly 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 Short Call Butterfly 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 Short Call Butterfly comparison:
| Comparison Aspect | Short Call Butterfly | Short Strangle |
| View |  |  |
| Strategy Introduction | Short Call Butterfly is the options strategy which is used when the trader expects a lot of volatility in the market. It is the opposite of the long call butterfly, in which the investor expects...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 | It is necessary that the strike prices of the in-the-money and out-of-the-money call options are equidistant from the at-the-money call options, and all the options have the same expiration date. | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call |
| Number of Positions | 4 | 4 |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - 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 | High Market Volatility | Little or No Market Volatility |
| Strategy Summary | Profit in Unsure Market Situations | Profits in Stable Market |
| Advantages | Limited Exposure, Low Investment | Higher Range of Profit |
| Disadvantages | Low Returns, Requires Significant Market Movement | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Short Call Butterfly Vs Short Put | Short Strangle Vs Short Put |
| Short Call Butterfly Vs Long Combo | Short Strangle Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Short Call Butterfly Vs Long Put | Short Strangle Vs Long Put | |
| Short Call Butterfly Vs Long Call | Short Strangle Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Short Strangle Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Short Strangle Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Short Strangle Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Short Strangle Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Short Strangle Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Short Strangle Vs Short Call | |
| Short Call Butterfly Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Short Call Butterfly Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Short Call Butterfly Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Short Call Butterfly Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Short Call Butterfly Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Short Strangle Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Short Call Butterfly Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Strangle Vs Short Call Butterfly option strategies.
Furthermore, if you as a trader are expecting price movement (without any idea of the direction) within a neutral market momentum – then short call butterfly is an optimal strategy for you.
There is a limited amount of risk involved and you can expect limited profit only in this options strategy.
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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