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 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 Put Vs Long 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 Put Vs Long Call Butterfly comparison:
| Comparison Aspect | Short Put | Long Call Butterfly |
| 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 | Long Call Butterfly is the options trading strategy which is used when the trader has a neutral outlook towards the market and expects the prices to remain range-bound...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. | Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Sell Put Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Options expire worthless except the one with the lower strike price |
| Investor Expectation | Prices go up sharply | No Movement in Price of the Underlying Asset |
| Strategy Summary | Complex & Risky | Effective |
| Advantages | Steady source of income till market remains bullish | Profits in Low Market Volatility, Limited Risks |
| Disadvantages | High Risk, Limited Profit | Limited Profit, 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 Call Butterfly Vs Short Put |
| Short Put Vs Long Combo | Long Call Butterfly Vs Long Combo | |
| Short Put Vs Synthetic Call | Long Call Butterfly Vs Synthetic Call | |
| Short Put Vs Short Call | Long Call Butterfly Vs Long Put | |
| Short Put Vs Long Call | Long Call Butterfly Vs Long Call | |
| Short Put Vs Covered Call | Long Call Butterfly Vs Covered Call | |
| Short Put Vs Covered Put | Long Call Butterfly Vs Covered Put | |
| Short Put Vs Protective Call | Long Call Butterfly Vs Protective Call | |
| Short Put Vs Short Box | Long Call Butterfly Vs Short Box | |
| Short Put Vs Long Call Condor | Long Call Butterfly Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Long Call Butterfly Vs Short Call Condor | |
| Short Put Vs Box Spread | Long Call Butterfly Vs Box Spread | |
| Short Put Vs Short Strangle | Long Call Butterfly Vs Short Strangle | |
| Short Put Vs Long Strangle | Long Call Butterfly Vs Long Strangle | |
| Short Put Vs Collar Strategy | Long Call Butterfly Vs Collar Strategy | |
| Short Put Vs Long Straddle | Long Call Butterfly Vs Long Straddle | |
| Short Put Vs Short Straddle | Long Call Butterfly Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Long Call Butterfly Vs Short Call | |
| Short Put Vs Short Call Butterfly | Long Call Butterfly Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Long Call Butterfly Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Long Call Butterfly Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Long Call Butterfly Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Long Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Long Call Butterfly option strategies.
At the same time, if you are in a neutral market situation and want to take a limited risk, then Long Call Butterfly is one of the options trading strategies you can look out for.
The profit you get using this strategy is also limited in scope.
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.
