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 Short 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 Put Vs Short 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 Put Vs Short Call comparison:
| Comparison Aspect | Short Put | Short Call |
| 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 | Short Call is used when the trader expects that the price of the underlying asset will go down sharply, he shorts a call. If the price of the asset goes down, the strategy generates profit. However, if the price...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 trader has the obligation to buy the stock at the predetermined price at the time of expiration. |
| Market Position | Bullish | Bearish |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Call |
| Number of Positions | 1 | 1 |
| Action Needed | Sell Put Option | Sell Call Option |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Strike Price PLUS Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices go up sharply | Prices of Assets Go Down Sharply |
| Strategy Summary | Complex & Risky | Risky |
| Advantages | Steady source of income till market remains bullish | Profits in Bearish Market |
| Disadvantages | High Risk, Limited Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | Naked Call, Uncovered Call |
| More Comparisons | Short Put Vs Long Put | Short Call Vs Short Put |
| Short Put Vs Long Combo | Short Call Vs Long Combo | |
| Short Put Vs Synthetic Call | Short Call Vs Synthetic Call | |
| Short Put Vs Short Call | Short Call Vs Long Put | |
| Short Put Vs Long Call | Short Call Vs Long Call | |
| Short Put Vs Covered Call | Short Call Vs Covered Call | |
| Short Put Vs Covered Put | Short Call Vs Covered Put | |
| Short Put Vs Protective Call | Short Call Vs Protective Call | |
| Short Put Vs Short Box | Short Call Vs Short Box | |
| Short Put Vs Long Call Condor | Short Call Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Short Call Vs Short Call Condor | |
| Short Put Vs Box Spread | Short Call Vs Box Spread | |
| Short Put Vs Short Strangle | Short Call Vs Short Strangle | |
| Short Put Vs Long Strangle | Short Call Vs Long Strangle | |
| Short Put Vs Collar Strategy | Short Call Vs Collar Strategy | |
| Short Put Vs Long Straddle | Short Call Vs Long Straddle | |
| Short Put Vs Short Straddle | Short Call Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Short Call Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Short Call Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Short Call Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Short Call Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Short Call Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Short Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Short Call option strategies.
As mentioned above, if you are looking to put minimal initial investment and have a high-risk appetite, then Short Call options strategy can work wonders for you. However, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited.
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.
