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 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 Call 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 Call Vs Short Call Butterfly comparison:
| Comparison Aspect | Long Call | Short Call Butterfly |
| 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 | 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 |
| 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. | 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. |
| Market Position | Bullish | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Call | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Buy Call Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Limited to Premium | Limited |
| Profit Potential | Unlimited | 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 | Exercise Option if Profitable, Let it go otherwise | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Up Sharply | High Market Volatility |
| Strategy Summary | Attractive | Profit in Unsure Market Situations |
| Advantages | Unlimited Profits, Limited Loss, Low Investment | Limited Exposure, Low Investment |
| Disadvantages | Premium may eat up the Profits | Low Returns, Requires Significant Market Movement |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Long Call Vs Long Put | Short Call Butterfly Vs Short Put |
| Long Call Vs Long Combo | Short Call Butterfly Vs Long Combo | |
| Long Call Vs Synthetic Call | Short Call Butterfly Vs Synthetic Call | |
| Long Call Vs Short Call | Short Call Butterfly Vs Long Put | |
| Long Call Vs Short Put | Short Call Butterfly Vs Long Call | |
| Long Call Vs Covered Call | Short Call Butterfly Vs Covered Call | |
| Long Call Vs Covered Put | Short Call Butterfly Vs Covered Put | |
| Long Call Vs Protective Call | Short Call Butterfly Vs Protective Call | |
| Long Call Vs Short Box | Short Call Butterfly Vs Short Box | |
| Long Call Vs Long Call Condor | Short Call Butterfly Vs Long Call Condor | |
| Long Call Vs Short Call Condor | Short Call Butterfly Vs Short Call Condor | |
| Long Call Vs Box Spread | Short Call Butterfly Vs Box Spread | |
| Long Call Vs Short Strangle | Short Call Butterfly Vs Short Strangle | |
| Long Call Vs Long Strangle | Short Call Butterfly Vs Long Strangle | |
| Long Call Vs Collar Strategy | Short Call Butterfly Vs Collar Strategy | |
| Long Call Vs Long Straddle | Short Call Butterfly Vs Long Straddle | |
| Long Call Vs Short Straddle | Short Call Butterfly Vs Short Straddle | |
| Long Call Vs Long Call Butterfly | Short Call Butterfly Vs Long Call Butterfly | |
| Long Call Vs Short Call Butterfly | Short Call Butterfly Vs Short Call | |
| Long Call Vs Bear Call Spread | Short Call Butterfly Vs Bear Call Spread | |
| Long Call Vs Bear Put Spread | Short Call Butterfly Vs Bear Put Spread | |
| Long Call Vs Bull Call Spread | Short Call Butterfly Vs Bull Call Spread | |
| Long Call Vs Bull Put Spread | Short Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Call Vs Short Call Butterfly 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 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.
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