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 Straddle Vs Covered Put 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 Straddle Vs Covered Put 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 Straddle Vs Covered Put comparison:
| Comparison Aspect | Long Straddle | Covered Put |
| View |  |  |
| Strategy Introduction | Long Straddle comes into play when the trader expects the market to move sharply, however, the direction of the movement cannot be predicted. The purpose of the strategy to allow the traders to benefit from volatile markets...more | Covered Put is the options trading strategy which involves shorting the underlying asset, along with selling a put option on the same number of shares. By doing this, the trader is able to...more |
| Investor Obligation | The trader should be able to trade based on his/her conviction that the markets will move, without being concerned about the direction of the movement. | If the price of the stock goes below the strike price of the put option, the put option will be expired and will have to be brought back. |
| Market Position | Neutral | Neutral or Slightly Bearish |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Call, Put | Put |
| Number of Positions | 2 | 2 |
| Action Needed | 1 ATM Call, 1 ATM Put | Short on Underlying and Short Put |
| Risk for You | Limited | Unlimited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium | Futures Price + Premium Received |
| Investor Intention | Put & Call Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Sharp Market Movement | Prices of Assets Go Down Slightly |
| Strategy Summary | Excellent & Simple | Steady Profits with Caution |
| Advantages | Uni-Directional Profit, Unlimited Gains | Income Generation, Reduced Losses |
| Disadvantages | High Premium | Unlimited Risk in specific situations |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Married Put |
| More Comparisons | Long Straddle Vs Short Put | Covered Put Vs Short Put |
| Long Straddle Vs Long Combo | Covered Put Vs Long Combo | |
| Long Straddle Vs Synthetic Call | Covered Put Vs Synthetic Call | |
| Long Straddle Vs Long Put | Covered Put Vs Long Put | |
| Long Straddle Vs Long Call | Covered Put Vs Long Call | |
| Long Straddle Vs Covered Call | Covered Put Vs Covered Call | |
| Long Straddle Vs Covered Put | Covered Put Vs Short Call | |
| Long Straddle Vs Protective Call | Covered Put Vs Protective Call | |
| Long Straddle Vs Short Box | Covered Put Vs Short Box | |
| Long Straddle Vs Long Call Condor | Covered Put Vs Long Call Condor | |
| Long Straddle Vs Short Call Condor | Covered Put Vs Short Call Condor | |
| Long Straddle Vs Box Spread | Covered Put Vs Box Spread | |
| Long Straddle Vs Short Strangle | Covered Put Vs Short Strangle | |
| Long Straddle Vs Long Strangle | Covered Put Vs Long Strangle | |
| Long Straddle Vs Collar Strategy | Covered Put Vs Collar Strategy | |
| Long Straddle Vs Short Call | Covered Put Vs Long Straddle | |
| Long Straddle Vs Short Straddle | Covered Put Vs Short Straddle | |
| Long Straddle Vs Long Call Butterfly | Covered Put Vs Long Call Butterfly | |
| Long Straddle Vs Short Call Butterfly | Covered Put Vs Short Call Butterfly | |
| Long Straddle Vs Bear Call Spread | Covered Put Vs Bear Call Spread | |
| Long Straddle Vs Bear Put Spread | Covered Put Vs Bear Put Spread | |
| Long Straddle Vs Bull Put Spread | Covered Put Vs Bull Call Spread | |
| Long Straddle Vs Bull Put Spread | Covered Put Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Straddle Vs Covered Put option strategies.
However, if you are in a neutral market situation and are looking for unlimited profits from your share market trades, then you can opt to go for the Long Straddle strategy.
There is a limited amount of risk involved as well, however, there are good chances of high profits if the strategy is executed well.
If you are looking at a bearish market momentum and are open towards high risk with consistent but limited profits, then Covered Put is suitable for your trading style.
Furthermore, as told above, it also depends on the market situation.
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