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 Put 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 Put 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 Put Vs Protective Call comparison:
| Comparison Aspect | Short Put | Protective Call |
| View |  |  |
| Strategy Introduction | The short put strategy is used when the investor is bullish towards the market and expects the prices to go up. He then sells the put option and makes a profit if...more | 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 |
| Investor Obligation | Investor is obligated to sell the shares at the predetermined price, at the time of expiry, if the buyer of the put option chooses to exercise his option. | Protective call works as a protection against the price reversal and is like an insurance policy |
| Market Position | Bullish | Bearish |
| Strategy Level Suitable for | Beginners | Intermediates |
| Options Traded | Put | Call |
| Number of Positions | 1 | 2 |
| Action Needed | Sell Put Option | Short Position on Buy Call Option |
| Risk for You | Unlimited | Limited |
| Profit Potential | Limited | Unlimited |
| Break Even Point for Investor | Strike Price MINUS Premium | Underlying Price - Call Premium |
| Investor Intention | Let Options Expire Worthlessly | Protect himself from extra losses if Price goes Up |
| Investor Expectation | Prices go up sharply | Market Prices to Go Down |
| Strategy Summary | Complex & Risky | Experience Helps |
| Advantages | Steady source of income till market remains bullish | Unlimited Profit, limited Risk |
| Disadvantages | High Risk, Limited Profit | Reduced Profits due to the Premium paid for Call Option. |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 2 | 1 |
| Also called as | Naked Put or Uncovered Put | Synthetic Long Put |
| More Comparisons | Short Put Vs Long Put | Protective Call Vs Short Put |
| Short Put Vs Long Combo | Protective Call Vs Long Combo | |
| Short Put Vs Synthetic Call | Protective Call Vs Synthetic Call | |
| Short Put Vs Short Call | Protective Call Vs Long Put | |
| Short Put Vs Long Call | Protective Call Vs Long Call | |
| Short Put Vs Covered Call | Protective Call Vs Covered Call | |
| Short Put Vs Covered Put | Protective Call Vs Covered Put | |
| Short Put Vs Protective Call | Protective Call Vs Short Call | |
| Short Put Vs Short Box | Protective Call Vs Short Box | |
| Short Put Vs Long Call Condor | Protective Call Vs Long Call Condor | |
| Short Put Vs Short Call Condor | Protective Call Vs Short Call Condor | |
| Short Put Vs Box Spread | Protective Call Vs Box Spread | |
| Short Put Vs Short Strangle | Protective Call Vs Short Strangle | |
| Short Put Vs Long Strangle | Protective Call Vs Long Strangle | |
| Short Put Vs Collar Strategy | Protective Call Vs Collar Strategy | |
| Short Put Vs Long Straddle | Protective Call Vs Long Straddle | |
| Short Put Vs Short Straddle | Protective Call Vs Short Straddle | |
| Short Put Vs Long Call Butterfly | Protective Call Vs Long Call Butterfly | |
| Short Put Vs Short Call Butterfly | Protective Call Vs Short Call Butterfly | |
| Short Put Vs Bear Call Spread | Protective Call Vs Bear Call Spread | |
| Short Put Vs Bear Put Spread | Protective Call Vs Bear Put Spread | |
| Short Put Vs Bull Call Spread | Protective Call Vs Bull Call Spread | |
| Short Put Vs Bull Put Spread | Protective Call Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Put Vs Protective Call option strategies.
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.
However, if your risk appetite is relatively high – then you can try Short Put although the profit potential in that strategy is limited.
Furthermore, as said 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.
