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 Straddle 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 Straddle 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 Straddle comparison:
| Comparison Aspect | Short Put | Short Straddle |
| 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 | Using the short straddle strategy, the investor makes an upfront gain through the premiums collected by writing the call and put options. The investor expects that there...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 investor must hold strong views of the steadiness in the market to be involved in the short straddle. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Put | Call, Put |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Put Option | 1 ATM Call, 1 ATM Put |
| Risk for You | Unlimited | Unlimited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price MINUS Premium | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call+ Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices go up sharply | No Market Movement |
| Strategy Summary | Complex & Risky | Complex |
| Advantages | Steady source of income till market remains bullish | Profits in Zero Market Volatility Situation |
| Disadvantages | High Risk, Limited Profit | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 2 |
| Also called as | Naked Put or Uncovered Put | NA |
| More Comparisons | Short Put Vs Long Put | Short Straddle Vs Short Put |
| Short Put Vs Long Combo | Short Straddle Vs Long Combo | |
| Short Put Vs Synthetic Call | Short Straddle Vs Synthetic Call | |
| Short Put Vs Short Call | Short Straddle Vs Long Put | |
| Short Put Vs Long Call | Short Straddle Vs Long Call | |
| Short Put Vs Covered Call | Short Straddle Vs Covered Call | |
| Short Put Vs Covered Put | Short Straddle Vs Covered Put | |
| Short Put Vs Protective Call | Short Straddle Vs Protective Call | |
| Short Put Vs Short Box | Short Straddle Vs Short Box | |
| Short Put Vs Long Call Condor | Short Straddle Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Short Straddle Vs Short Call Condor | |
| Short Put Vs Box Spread | Short Straddle Vs Box Spread | |
| Short Put Vs Short Strangle | Short Straddle Vs Short Strangle | |
| Short Put Vs Long Strangle | Short Straddle Vs Long Strangle | |
| Short Put Vs Collar Strategy | Short Straddle Vs Collar Strategy | |
| Short Put Vs Long Straddle | Short Straddle Vs Long Straddle | |
| Short Put Vs Short Straddle | Short Straddle Vs Short Call | |
| Short Put Vs Long Call Butterfly | Short Straddle Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Short Straddle Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Short Straddle Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Short Straddle Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Short Straddle Vs Bull Put Spread | |
| Short Put Vs Bull Put Spread | Short Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Short Straddle option strategies.
At the same time, if you are an experienced trader and are in a neutral market situation, then Short Straddle is one of the options you can look out for.
There is a high amount of risk involved as well – thus, you have to be very sure of the point that the market has no volatility. Otherwise, stakes can be very high.
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.
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