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 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 Straddle 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 Straddle Vs Short Call Butterfly comparison:
| Comparison Aspect | Short Call Butterfly | Long Straddle |
| 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 | 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 |
| 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. | 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. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Beginners |
| Options Traded | Call | Call, Put |
| Number of Positions | 4 | 2 |
| Action Needed | 2 ATM, 1 ITM, 1 OTM Calls | 1 ATM Call, 1 ATM Put |
| 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 = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Investor Intention | Let Options Expire Worthlessly | Put & Call Options Expire Worthlessly |
| Investor Expectation | High Market Volatility | Sharp Market Movement |
| Strategy Summary | Profit in Unsure Market Situations | Excellent & Simple |
| Advantages | Limited Exposure, Low Investment | Uni-Directional Profit, Unlimited Gains |
| Disadvantages | Low Returns, Requires Significant Market Movement | High Premium |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | NA |
| More Comparisons | Short Call Butterfly Vs Short Put | Long Straddle Vs Short Put |
| Short Call Butterfly Vs Long Combo | Long Straddle Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Long Straddle Vs Synthetic Call | |
| Short Call Butterfly Vs Long Put | Long Straddle Vs Long Put | |
| Short Call Butterfly Vs Long Call | Long Straddle Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Long Straddle Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Long Straddle Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Long Straddle Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Long Straddle Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Long Straddle Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Long Straddle Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Long Straddle Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Long Straddle Vs Short Strangle | |
| Short Call Butterfly Vs Long Strangle | Long Straddle Vs Long Strangle | |
| Short Call Butterfly Vs Collar Strategy | Long Straddle Vs Collar Strategy | |
| Short Call Butterfly Vs Long Straddle | Long Straddle Vs Short Call | |
| Short Call Butterfly Vs Short Straddle | Long Straddle Vs Short Straddle | |
| Short Call Butterfly Vs Long Call Butterfly | Long Straddle Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Long Straddle Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Long Straddle Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Long Straddle Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Long Straddle Vs Bull Put Spread | |
| Short Call Butterfly Vs Bull Put Spread | Long Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Short Call Butterfly option strategies.
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.
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.
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.
