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 Short Call Butterfly Vs Protective Call 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 Short Call Butterfly Vs Protective Call 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 Short Call Butterfly Vs Protective Call comparison:
| Comparison Aspect | Protective Call | Short Call Butterfly |
| View |  |  |
| Strategy Introduction | A Protective call combines an existing short position on an underlying asset with buying of call options, to safeguard against the price rise against the expectations...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 | Protective call works as a protection against the price reversal and is like an insurance policy | 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 | Bearish | Neutral |
| Strategy Level Suitable for | Intermediates | Intermediates |
| Options Traded | Call | Call |
| Number of Positions | 2 | 4 |
| Action Needed | Short Position on Buy Call Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Limited | Limited |
| Profit Potential | Unlimited | Limited |
| Break Even Point for Investor | Underlying Price - Call Premium | Lower Break-even = Lower Strike Price + Net Premium Upper Break-even = Higher Strike Price - Net Premium |
| Investor Intention | Protect himself from extra losses if Price goes Up | Let Options Expire Worthlessly |
| Investor Expectation | Market Prices to Go Down | High Market Volatility |
| Strategy Summary | Experience Helps | Profit in Unsure Market Situations |
| Advantages | Unlimited Profit, limited Risk | Limited Exposure, Low Investment |
| Disadvantages | Reduced Profits due to the Premium paid for Call Option. | Low Returns, Requires Significant Market Movement |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Synthetic Long Put | NA |
| More Comparisons | Protective Call Vs Short Put | Short Call Butterfly Vs Short Put |
| Protective Call Vs Long Combo | Short Call Butterfly Vs Long Combo | |
| Protective Call Vs Synthetic Call | Short Call Butterfly Vs Synthetic Call | |
| Protective Call Vs Long Put | Short Call Butterfly Vs Long Put | |
| Protective Call Vs Long Call | Short Call Butterfly Vs Long Call | |
| Protective Call Vs Covered Call | Short Call Butterfly Vs Covered Call | |
| Protective Call Vs Covered Put | Short Call Butterfly Vs Covered Put | |
| Protective Call Vs Short Call | Short Call Butterfly Vs Protective Call | |
| Protective Call Vs Short Box | Short Call Butterfly Vs Short Box | |
| Protective Call Vs Long Call Condor | Short Call Butterfly Vs Long Call Condor | |
| Protective Call Vs Short Call Condor | Short Call Butterfly Vs Short Call Condor | |
| Protective Call Vs Box Spread | Short Call Butterfly Vs Box Spread | |
| Protective Call Vs Short Strangle | Short Call Butterfly Vs Short Strangle | |
| Protective Call Vs Long Strangle | Short Call Butterfly Vs Long Strangle | |
| Protective Call Vs Collar Strategy | Short Call Butterfly Vs Collar Strategy | |
| Protective Call Vs Long Straddle | Short Call Butterfly Vs Long Straddle | |
| Protective Call Vs Short Straddle | Short Call Butterfly Vs Short Straddle | |
| Protective Call Vs Long Call Butterfly | Short Call Butterfly Vs Long Call Butterfly | |
| Protective Call Vs Short Call Butterfly | Short Call Butterfly Vs Short Call | |
| Protective Call Vs Bear Call Spread | Short Call Butterfly Vs Bear Call Spread | |
| Protective Call Vs Bear Put Spread | Short Call Butterfly Vs Bear Put Spread | |
| Protective Call Vs Bull Call Spread | Short Call Butterfly Vs Bull Call Spread | |
| Protective Call Vs Bull Put Spread | Short Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Butterfly Vs Protective Call option strategies.
Furthermore, 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.
At the same time, if you are looking at a bearish market momentum and want to take a limited risk with an eye on unlimited profits, then the protective call is the strategy you must be using.
Furthermore, as told above, it also depends on the market situation.
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