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 Put Vs Long Combo 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 Put Vs Long Combo 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 Put Vs Long Combo comparison:
| Comparison Aspect | Short Put | Long Combo |
| View |  |  |
| Strategy Introduction | The short put strategy is used when the investor is bullish towards the market and expects the prices to go up. He then sells the put option and makes a profit if...more | The long combo is used when the investor is bullish towards the market and is certain that the prices of the shares will go up...more |
| Investor Obligation | Investor is obligated to sell the shares at the predetermined price, at the time of expiry, if the buyer of the put option chooses to exercise his option. | The strategy expects low initial investment, however, the trader needs to pay the premium on the trades irrespective of the trade result. |
| Market Position | Bullish | Bullish |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Put, Call |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Put Option | Sell One OTM Put, Buy One OTM Call |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Call Strike + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Low Upfront Investments, High ROI |
| Investor Expectation | Prices go up sharply | Price of Stocks Go Up |
| Strategy Summary | Complex & Risky | Complex |
| Advantages | Steady source of income till market remains bullish | Low Upfront Investment, Unlimited Profits |
| Disadvantages | High Risk, Limited Profit | Unlimited Loss, High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Long Combo Vs Short Put |
| Short Put Vs Long Combo | Long Combo Vs Long Put | |
| Short Put Vs Synthetic Call | Long Combo Vs Synthetic Call | |
| Short Put Vs Short Call | Long Combo Vs Short Call | |
| Short Put Vs Long Call | Long Combo Vs Long Call | |
| Short Put Vs Covered Call | Long Combo Vs Covered Call | |
| Short Put Vs Covered Put | Long Combo Vs Covered Put | |
| Short Put Vs Protective Call | Long Combo Vs Protective Call | |
| Short Put Vs Short Box | Long Combo Vs Short Box | |
| Short Put Vs Long Call Condor | Long Combo Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Long Combo Vs Short Call Condor | |
| Short Put Vs Box Spread | Long Combo Vs Box Spread | |
| Short Put Vs Short Strangle | Long Combo Vs Short Strangle | |
| Short Put Vs Long Strangle | Long Combo Vs Long Strangle | |
| Short Put Vs Collar Strategy | Long Combo Vs Collar Strategy | |
| Short Put Vs Long Straddle | Long Combo Vs Long Straddle | |
| Short Put Vs Short Straddle | Long Combo Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Long Combo Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Long Combo Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Long Combo Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Long Combo Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Long Combo Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Long Combo Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Short Put Vs Long Combo option strategies.
As mentioned above, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited. However, if you are looking to put minimal initial investment and are open for unlimited profits as well as risks, then Long Combo options strategy can work wonders for you.
Furthermore, as said 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.
