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 Strangle 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 Strangle 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 Strangle comparison:
| Comparison Aspect | Long Straddle | Short Strangle |
| 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 | The short strangle options trading strategy is an excellent strategy to be deployed when the investor is expecting little to no volatility in the market...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 prediction does not come out true, the strategy can cause unlimited loss. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Beginners | Experts |
| Options Traded | Call, Put | Call |
| Number of Positions | 2 | 4 |
| Action Needed | 1 ATM Call, 1 ATM Put | 1 Short ITM Call, 1 Long ITM Call, 1 Long OTM Call, 1 Short OTM Call |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Unlimited |
| Break Even Point for Investor | Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium | Lower Breakeven = Lower Strike Price + Net Premium Upper breakeven = Higher Strike Price - Net Premium |
| Investor Intention | Put & Call Options Expire Worthlessly | Stock price remains between the 2 option Strike Prices and the options expire worthlessly |
| Investor Expectation | Sharp Market Movement | Little or No Market Volatility |
| Strategy Summary | Excellent & Simple | Profits in Stable Market |
| Advantages | Uni-Directional Profit, Unlimited Gains | Higher Range of Profit |
| Disadvantages | High Premium | Low Premium, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | NA | Credit Spread |
| More Comparisons | Long Straddle Vs Short Put | Short Strangle Vs Short Put |
| Long Straddle Vs Long Combo | Short Strangle Vs Long Combo | |
| Long Straddle Vs Synthetic Call | Short Strangle Vs Synthetic Call | |
| Long Straddle Vs Long Put | Short Strangle Vs Long Put | |
| Long Straddle Vs Long Call | Short Strangle Vs Long Call | |
| Long Straddle Vs Covered Call | Short Strangle Vs Covered Call | |
| Long Straddle Vs Covered Put | Short Strangle Vs Covered Put | |
| Long Straddle Vs Protective Call | Short Strangle Vs Protective Call | |
| Long Straddle Vs Short Box | Short Strangle Vs Short Box | |
| Long Straddle Vs Long Call Condor | Short Strangle Vs Long Call Condor | |
| Long Straddle Vs Short Call Condor | Short Strangle Vs Short Call Condor | |
| Long Straddle Vs Box Spread | Short Strangle Vs Box Spread | |
| Long Straddle Vs Short Strangle | Short Strangle Vs Short Call | |
| Long Straddle Vs Long Strangle | Short Strangle Vs Long Strangle | |
| Long Straddle Vs Collar Strategy | Short Strangle Vs Collar Strategy | |
| Long Straddle Vs Short Call | Short Strangle Vs Long Straddle | |
| Long Straddle Vs Short Straddle | Short Strangle Vs Short Straddle | |
| Long Straddle Vs Long Call Butterfly | Short Strangle Vs Long Call Butterfly | |
| Long Straddle Vs Short Call Butterfly | Short Strangle Vs Short Call Butterfly | |
| Long Straddle Vs Bear Call Spread | Short Strangle Vs Bear Call Spread | |
| Long Straddle Vs Bear Put Spread | Short Strangle Vs Bear Put Spread | |
| Long Straddle Vs Bull Put Spread | Short Strangle Vs Bull Call Spread | |
| Long Straddle Vs Bull Put Spread | Short Strangle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Long Straddle Vs Short Strangle option strategies.
At the same time, if you are in a neutral market situation and have a limited risk appetite, then Short Strangle is a potential option strategy for you. Generally, this strategy is suitable when you are sure that there is going to be low or no market volatility at all.
The strategy comes with a limited profit potential.
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.
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