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 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 Short 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 Short Call Vs Short Call Butterfly comparison:
| Comparison Aspect | Short Call | Short Call Butterfly |
| View |  |  |
| Strategy Introduction | Short Call is used when the trader expects that the price of the underlying asset will go down sharply, he shorts a call. If the price of the asset goes down, the strategy generates profit. However, if the price...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 obligation to buy the stock at the predetermined price at the time of expiration. | 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 | Experts | Intermediates |
| Options Traded | Call | Call |
| Number of Positions | 1 | 4 |
| Action Needed | Sell Call Option | 2 ATM, 1 ITM, 1 OTM Calls |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | 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 | Let Options Expire Worthlessly | Let Options Expire Worthlessly |
| Investor Expectation | Prices of Assets Go Down Sharply | High Market Volatility |
| Strategy Summary | Risky | Profit in Unsure Market Situations |
| Advantages | Profits in Bearish Market | Limited Exposure, Low Investment |
| Disadvantages | Limited Profit, Unlimited Risk | Low Returns, Requires Significant Market Movement |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 1 |
| Also called as | Naked Call, Uncovered Call | NA |
| More Comparisons | Short Call Vs Short Put | Short Call Butterfly Vs Short Put |
| Short Call Vs Long Combo | Short Call Butterfly Vs Long Combo | |
| Short Call Vs Synthetic Call | Short Call Butterfly Vs Synthetic Call | |
| Short Call Vs Long Put | Short Call Butterfly Vs Long Put | |
| Short Call Vs Long Call | Short Call Butterfly Vs Long Call | |
| Short Call Vs Covered Call | Short Call Butterfly Vs Covered Call | |
| Short Call Vs Covered Put | Short Call Butterfly Vs Covered Put | |
| Short Call Vs Protective Call | Short Call Butterfly Vs Protective Call | |
| Short Call Vs Short Box | Short Call Butterfly Vs Short Box | |
| Short Call Vs Long Call Condor | Short Call Butterfly Vs Long Call Condor | |
| Short Call Vs Short Call Condor | Short Call Butterfly Vs Short Call Condor | |
| Short Call Vs Box Spread | Short Call Butterfly Vs Box Spread | |
| Short Call Vs Short Strangle | Short Call Butterfly Vs Short Strangle | |
| Short Call Vs Long Strangle | Short Call Butterfly Vs Long Strangle | |
| Short Call Vs Collar Strategy | Short Call Butterfly Vs Collar Strategy | |
| Short Call Vs Long Straddle | Short Call Butterfly Vs Long Straddle | |
| Short Call Vs Short Straddle | Short Call Butterfly Vs Short Straddle | |
| Short Call Vs Long Call Butterfly | Short Call Butterfly Vs Long Call Butterfly | |
| Short Call Vs Short Call Butterfly | Short Call Butterfly Vs Short Call | |
| Short Call Vs Bear Call Spread | Short Call Butterfly Vs Bear Call Spread | |
| Short Call Vs Bear Put Spread | Short Call Butterfly Vs Bear Put Spread | |
| Short Call Vs Bull Call Spread | Short Call Butterfly Vs Bull Call Spread | |
| Short Call Vs Bull Put Spread | Short Call Butterfly Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Call Vs Short Call Butterfly option strategies.
As mentioned above, if you are looking to put minimal initial investment and have a high-risk appetite, then Short Call options strategy can work wonders for you.
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.
Furthermore, as said above, it also depends on the market situation.
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