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 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 Short 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 Short Straddle Vs Short Call Butterfly comparison:
| Comparison Aspect | Short Call Butterfly | Short 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 | Using the short straddle strategy, the investor makes an upfront gain through the premiums collected by writing the call and put options. The investor expects that there...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 investor must hold strong views of the steadiness in the market to be involved in the short straddle. |
| Market Position | Neutral | Neutral |
| Strategy Level Suitable for | Intermediates | Experts |
| 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 | Unlimited |
| Profit Potential | Limited | Limited |
| 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 | Let Options Expire Worthlessly |
| Investor Expectation | High Market Volatility | No Market Movement |
| Strategy Summary | Profit in Unsure Market Situations | Complex |
| Advantages | Limited Exposure, Low Investment | Profits in Zero Market Volatility Situation |
| Disadvantages | Low Returns, Requires Significant Market Movement | Limited Profit, Unlimited Risk |
| Market Scenarios - Profit | 1 | 1 |
| Market Scenarios - Loss | 1 | 2 |
| Also called as | NA | NA |
| More Comparisons | Short Call Butterfly Vs Short Put | Short Straddle Vs Short Put |
| Short Call Butterfly Vs Long Combo | Short Straddle Vs Long Combo | |
| Short Call Butterfly Vs Synthetic Call | Short Straddle Vs Synthetic Call | |
| Short Call Butterfly Vs Long Put | Short Straddle Vs Long Put | |
| Short Call Butterfly Vs Long Call | Short Straddle Vs Long Call | |
| Short Call Butterfly Vs Covered Call | Short Straddle Vs Covered Call | |
| Short Call Butterfly Vs Covered Put | Short Straddle Vs Covered Put | |
| Short Call Butterfly Vs Protective Call | Short Straddle Vs Protective Call | |
| Short Call Butterfly Vs Short Box | Short Straddle Vs Short Box | |
| Short Call Butterfly Vs Long Call Condor | Short Straddle Vs Long Call Condor | |
| Short Call Butterfly Vs Short Call Condor | Short Straddle Vs Short Call Condor | |
| Short Call Butterfly Vs Box Spread | Short Straddle Vs Box Spread | |
| Short Call Butterfly Vs Short Strangle | Short Straddle Vs Short Strangle | |
| Short Call Butterfly Vs Long Strangle | Short Straddle Vs Long Strangle | |
| Short Call Butterfly Vs Collar Strategy | Short Straddle Vs Collar Strategy | |
| Short Call Butterfly Vs Long Straddle | Short Straddle Vs Long Straddle | |
| Short Call Butterfly Vs Short Straddle | Short Straddle Vs Short Call | |
| Short Call Butterfly Vs Long Call Butterfly | Short Straddle Vs Long Call Butterfly | |
| Short Call Butterfly Vs Short Call | Short Straddle Vs Short Call Butterfly | |
| Short Call Butterfly Vs Bear Call Spread | Short Straddle Vs Bear Call Spread | |
| Short Call Butterfly Vs Bear Put Spread | Short Straddle Vs Bear Put Spread | |
| Short Call Butterfly Vs Bull Call Spread | Short Straddle Vs Bull Put Spread | |
| Short Call Butterfly Vs Bull Put Spread | Short Straddle Vs Bull Put Spread |
Thus, with this, we wrap up our comparison on Short Straddle Vs Short Call Butterfly option strategies.
At the same time, if you are an experienced trader and are in a neutral market situation, then Short Straddle is one of the options you can look out for.
There is a high amount of risk involved as well – thus, you have to be very sure of the point that the market has no volatility. Otherwise, stakes can be very high.
However, 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 told above, it also depends on the market situation.
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