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 Synthetic 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 Synthetic 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 Synthetic Call comparison:
| Comparison Aspect | Short Put | Synthetic 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 | Synthetic Call is an options strategy in which an underlying asset is combined with a put option to protect against depreciation in the value of the underlying asset. The overall effect is similar to...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. | Stay with the position |
| Market Position | Bullish | Bullish |
| Strategy Level Suitable for | Beginners | Beginners |
| Options Traded | Put | Put |
| Number of Positions | 1 | 2 (Underlying + Put) |
| Action Needed | Sell Put Option | Holds a long position in an underlying asset and a put option on the same stock |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Underlying Price + Put Premium |
| Investor Intention | Let Options Expire Worthlessly | Save Transaction Costs, Stay Protected from downward market movement. |
| Investor Expectation | Prices go up sharply | Prices of the Assets to Go Up |
| Strategy Summary | Complex & Risky | Profitable |
| Advantages | Steady source of income till market remains bullish | Dividends on Stocks, Limited Risk, Unlimited Profit |
| Disadvantages | High Risk, Limited Profit | Chances of loss if the underlying goes down |
| 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 | Synthetic Call Vs Short Put |
| Short Put Vs Long Combo | Synthetic Call Vs Long Combo | |
| Short Put Vs Synthetic Call | Synthetic Call Vs Short Call | |
| Short Put Vs Short Call | Synthetic Call Vs Long Put | |
| Short Put Vs Long Call | Synthetic Call Vs Long Call | |
| Short Put Vs Covered Call | Synthetic Call Vs Covered Call | |
| Short Put Vs Covered Put | Synthetic Call Vs Covered Put | |
| Short Put Vs Protective Call | Synthetic Call Vs Protective Call | |
| Short Put Vs Short Box | Synthetic Call Vs Short Box | |
| Short Put Vs Long Call Condor | Synthetic Call Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Synthetic Call Vs Short Call Condor | |
| Short Put Vs Box Spread | Synthetic Call Vs Box Spread | |
| Short Put Vs Short Strangle | Synthetic Call Vs Short Strangle | |
| Short Put Vs Long Strangle | Synthetic Call Vs Long Strangle | |
| Short Put Vs Collar Strategy | Synthetic Call Vs Collar Strategy | |
| Short Put Vs Long Straddle | Synthetic Call Vs Long Straddle | |
| Short Put Vs Short Straddle | Synthetic Call Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Synthetic Call Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Synthetic Call Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Synthetic Call Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Synthetic Call Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Synthetic Call Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Synthetic Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Synthetic Call option strategies.
At the same time, if you are looking at a bearish market momentum and are open towards a limited risk with a potential of unlimited profits, then Synthetic Call options strategy is definitely a positive go 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.
