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 Strangle Vs Short 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 Long Strangle Vs Short 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 Long Strangle Vs Short Call Butterfly comparison:
| Comparison Aspect | Short Call Butterfly | Long Strangle |
| View |  |  |
| Strategy Introduction | Short Call Butterfly is the options strategy which is used when the trader expects a lot of volatility in the market. It is the opposite of the long call butterfly, in which the investor expects...more | The long strangle strategy helps the trader to take advantage of the volatility in the market. It is a trend neutral strategy, so the trader does not need to be certain of the direction...more |
| Investor Obligation | It is necessary that the strike prices of the in-the-money and out-of-the-money call options are equidistant from the at-the-money call options, and all the options have the same expiration date. | It is a trend neutral strategy, so the trader does not need to be certain of the direction of the price movement. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Call | Call, Put |
| Number of Positions | 4 | 2 |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | One OTM Put, One OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium | Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Both call and put options expire worthlessly |
| Investor Expectation | High Market Volatility | Market Shows High Volatility |
| Strategy Summary | Profit in Unsure Market Situations | Attractive |
| Advantages | Limited Exposure, Low Investment | Less Expensive, Limited Risk, Unlimited Gain |
| Disadvantages | Low Returns, Requires Significant Market Movement | Price Movement has to be Big |
| Market Scenarios - Profit | 1 | 2 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Call Butterfly Vs Short Put | Long Strangle Vs Short Put |
| Short Call Butterfly Vs Long Combo | Long Strangle Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Long Strangle Vs Synthetic Call | |
| Short Call Butterfly Vs Long Put | Long Strangle Vs Long Put | |
| Short Call Butterfly Vs Long Call | Long Strangle Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Long Strangle Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Long Strangle Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Long Strangle Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Long Strangle Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Long Strangle Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Long Strangle Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Long Strangle Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Long Strangle Vs Short Strangle | |
| Short Call Butterfly Vs Long Strangle | Long Strangle Vs Short Call | |
| Short Call Butterfly Vs Collar Strategy | Long Strangle Vs Collar Strategy | |
| Short Call Butterfly Vs Long Straddle | Long Strangle Vs Long Straddle | |
| Short Call Butterfly Vs Short Straddle | Long Strangle Vs Short Straddle | |
| Short Call Butterfly Vs Long Call Butterfly | Long Strangle Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Long Strangle Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Long Strangle Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Long Strangle Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Long Strangle Vs Bull Call Spread | |
| Short Call Butterfly Vs Bull Put Spread | Long Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison of Long Strangle Vs Short Call Butterfly option strategies.
At the same time, 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 Strangle strategy. Just remember, you need to be aware of the “right” strike prices for optimal gains.
At the same time, if you as a trader are expecting price movement (without any idea of the direction) within a neutral market momentum – then short call butterfly is an optimal strategy for you.
There is a limited amount of risk involved and you can expect limited profit only in this options strategy.
Furthermore, as told 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.
