Compare Strategies
SHORT STRANGLE | IRON CONDORS | |
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About Strategy |
Short Strangle Option StrategyThis strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if |
Iron Condors Option StrategyIron Condor is a neutral trading strategy. A trader tries to make profit from low volatility in the price of the underlying asset. This strategy will be better understood if you recall ‘Bull Put Spread’ & ‘Bear Call Spread’. A trader will buy one Deep OTM Put Option and sell one OTM Put Option,. He will also sell one OTM Call Option and buy one Deep OTM Call Option. .. |
SHORT STRANGLE Vs IRON CONDORS - Details
SHORT STRANGLE | IRON CONDORS | |
---|---|---|
Market View | Neutral | Neutral |
Type (CE/PE) | CE (Call Option) + PE (Put Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 2 | 4 |
Strategy Level | Advance | Advance |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Limited |
Breakeven Point | Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received |
SHORT STRANGLE Vs IRON CONDORS - When & How to use ?
SHORT STRANGLE | IRON CONDORS | |
---|---|---|
Market View | Neutral | Neutral |
When to use? | This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile. | When a trader tries to make profit from low volatility in the price of the underlying asset. |
Action | Sell OTM Call, Sell OTM Put | Sell 1 OTM Put, Buy 1 OTM Put (Lower Strike), Sell 1 OTM Call, Buy 1 OTM Call (Higher Strike) |
Breakeven Point | Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium | Upper Breakeven Point = Strike Price of Short Call + Net Premium Received, Lower Breakeven Point = Strike Price of Short Put - Net Premium Received |
SHORT STRANGLE Vs IRON CONDORS - Risk & Reward
SHORT STRANGLE | IRON CONDORS | |
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Maximum Profit Scenario | Maximum Profit = Net Premium Received | Net Premium Received - Commissions Paid |
Maximum Loss Scenario | Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received | Strike Price of Long Call - Strike Price of Short Call - Net Premium Received + Commissions Paid |
Risk | Unlimited | Limited |
Reward | Limited | Limited |
SHORT STRANGLE Vs IRON CONDORS - Strategy Pros & Cons
SHORT STRANGLE | IRON CONDORS | |
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Similar Strategies | Short Straddle, Long Strangle | Long Put Butterfly, Neutral Calendar Spread |
Disadvantage | • Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount. | • Full of risk. • Unlimited maximum loss. |
Advantages | • Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range. | • Chance to gather double premium. • Sure, maximum gains on one-half the trade. • Flexible and double leverage at half price. |