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 Butterfly Vs Short Call Condor 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 Butterfly Vs Short Call Condor 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 Butterfly Vs Short Call Condor comparison:
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
Short Call Condor works in a neutral market and helps the trader to be unaffected by the direction of the trend. The profits can be earned irrespective of the direction in which the prices move...more
Investor Obligation
Create Bull Spread when High Market Expectations, Create Bear Spread when Low Market Expectations.
In case of limited price movement, the trader supposedlly incurs a loss.
Market Position
Neutral
Neutral
Strategy Level Suitable for
Intermediates
Intermediates
Options Traded
Call
Call
Number of Positions
4
4
Action Needed
2 ATM, 1 ITM, 1 OTM Calls
1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call
Risk for You
Limited
Limited
Profit Potential
Limited
Limited
Break Even Point for Investor
Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium
Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium
Investor Intention
Options expire worthless except the one with the lower strike price
Let Options Expire Worthlessly
Investor Expectation
No Movement in Price of the Underlying Asset
High Implied Volatility
Strategy Summary
Effective
Almost a Hero (Limited Profit)
Advantages
Profits in Low Market Volatility, Limited Risks
Low Risk, Low Initial Capital, Profit Chances High
Thus, with this, we wrap up our comparison on Long Call Butterfly Vs Short Call Condor option strategies.
As mentioned above, if you are in a neutral market situation and have a limited risk appetite, then Short Call Condor may suit you well. You need to know that this strategy provides limited level profit only.
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.
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