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 Call 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 Call 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 Call Vs Long Call Butterfly comparison:
| Comparison Aspect | Short Call | Long Call Butterfly |
| View |  |  |
| Strategy Introduction | 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 | 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 | The trader has the obligation to buy the stock at the predetermined price at the time of expiration. | Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations. |
| Market Position | Bearish | Neutral |
| Strategy Level Suitable for | Experts | Intermediates |
| Options Traded | Call | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Sell Call Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Limited |
| Break Even Point for Investor | Strike Price PLUS 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 of Assets Go Down Sharply | No Movement in Price of the Underlying Asset |
| Strategy Summary | Risky | Effective |
| Advantages | Profits in Bearish Market | Profits in Low Market Volatility, Limited Risks |
| Disadvantages | Limited Profit, Unlimited Risk | Limited Profit, High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Long Call Butterfly Vs Short Put |
| Short Call Vs Long Combo | Long Call Butterfly Vs Long Combo | |
| Short Call Vs Synthetic Call | Long Call Butterfly Vs Synthetic Call | |
| Short Call Vs Long Put | Long Call Butterfly Vs Long Put | |
| Short Call Vs Long Call | Long Call Butterfly Vs Long Call | |
| Short Call Vs Covered Call | Long Call Butterfly Vs Covered Call | |
| Short Call Vs Covered Put | Long Call Butterfly Vs Covered Put | |
| Short Call Vs Protective Call | Long Call Butterfly Vs Protective Call | |
| Short Call Vs Short Box | Long Call Butterfly Vs Short Box | |
| Short Call Vs Long Call Condor | Long Call Butterfly Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Long Call Butterfly Vs Short Call Condor | |
| Short Call Vs Box Spread | Long Call Butterfly Vs Box Spread | |
| Short Call Vs Short Strangle | Long Call Butterfly Vs Short Strangle | |
| Short Call Vs Long Strangle | Long Call Butterfly Vs Long Strangle | |
| Short Call Vs Collar Strategy | Long Call Butterfly Vs Collar Strategy | |
| Short Call Vs Long Straddle | Long Call Butterfly Vs Long Straddle | |
| Short Call Vs Short Straddle | Long Call Butterfly Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Long Call Butterfly Vs Short Call | |
| Short Call Vs Short Call Butterfly | Long Call Butterfly Vs Short Call Butterfly | |
| Short Call Vs Bear Call Spread | Long Call Butterfly Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Long Call Butterfly Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Long Call Butterfly Vs Bull Call Spread | |
| Short Call Vs Bull Put Spread | Long Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Long Call Butterfly 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.
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.
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.
