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 Long Call Vs Short Strangle 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 Long Call Vs Short Strangle 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 Long Call Vs Short Strangle comparison:
| Comparison Aspect | Long Call | Short Strangle |
| View |  |  |
| Strategy Introduction | In Long Call Strategy, the trader enters into a contract to buy a call option when he is bullish towards the market. The trader anticipates that the price of the security will go up in the future. However, he does not want to take the risk of buying the security outright...more | The short strangle options trading strategy is an excellent strategy to be deployed when the investor is expecting little to no volatility in the market...more |
| Investor Obligation | The trader has the right to buy a security at a future date at a predefined price. The term long itself means buying a security or buying an option. | If the prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| Options Traded | Call | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Buy Call Option | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Limited to Premium | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Strike Price PLUS Premium | Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Exercise Option if Profitable, Let it go otherwise | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Prices of Assets Go Up Sharply | Little or No Market Volatility |
| Strategy Summary | Attractive | Profits in Stable Market |
| Advantages | Unlimited Profits, Limited Loss, Low Investment | Higher Range of Profit |
| Disadvantages | Premium may eat up the Profits | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Long Call Vs Long Put | Short Strangle Vs Short Put |
| Long Call Vs Long Combo | Short Strangle Vs Long Combo | |
| Long Call Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Long Call Vs Short Call | Short Strangle Vs Long Put | |
| Long Call Vs Short Put | Short Strangle Vs Long Call | |
| Long Call Vs Covered Call | Short Strangle Vs Covered Call | |
| Long Call Vs Covered Put | Short Strangle Vs Covered Put | |
| Long Call Vs Protective Call | Short Strangle Vs Protective Call | |
| Long Call Vs Short Box | Short Strangle Vs Short Box | |
| Long Call Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Long Call Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Long Call Vs Box Spread | Short Strangle Vs Box Spread | |
| Long Call Vs Short Strangle | Short Strangle Vs Short Call | |
| Long Call Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Long Call Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Long Call Vs Long Straddle | Short Strangle Vs Long Straddle | |
| Long Call Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Long Call Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Long Call Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Long Call Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Long Call Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Long Call Vs Bull Call Spread | Short Strangle Vs Bull Call Spread | |
| Long Call Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Call Vs Short Strangle option strategies.
As mentioned above, if you are in a Bullish market situation and want to make unlimited profits on your trades, then Long Call is one of the options trading strategies you can opt for. The risk involved in this strategy is more than limited and thus, the strategy can only work for higher profits if you have the experience to run similar strategies in the past.
At the same time, if you are in a neutral market situation and have a limited risk appetite, then Short Strangle is a potential option strategy for you. Generally, this strategy is suitable when you are sure that there is going to be low or no market volatility at all.
The strategy comes with a limited profit potential.
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