Compare Strategies
LONG CALL | SHORT PUT | |
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About Strategy |
Long Call Option StrategyThis is one of the basic strategies as it involves entering into one position i.e. buying the Call Option only. Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future. Risk:
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Short Put Option StrategyA trader will short put if he is bullish in nature and expects the underlying asset not to fall below a certain level. Risk: Losses will be potentially unlimited if the stock skyrockets above the strike price of put. |
LONG CALL Vs SHORT PUT - Details
LONG CALL | SHORT PUT | |
---|---|---|
Market View | Bullish | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 1 |
Strategy Level | Beginner Level | Beginners |
Reward Profile | Unlimited | Limited |
Risk Profile | Limited | Unlimited |
Breakeven Point | Strike Price + Premium | Strike Price - Premium |
LONG CALL Vs SHORT PUT - When & How to use ?
LONG CALL | SHORT PUT | |
---|---|---|
Market View | Bullish (Any investor who buys the Call Option will be bullish in nature and would be expecting the market to give decent returns in the near future.) | Bullish |
When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. |
Action | Buying Call option | Sell Put Option |
Breakeven Point | Strike price + Premium | Strike Price - Premium |
LONG CALL Vs SHORT PUT - Risk & Reward
LONG CALL | SHORT PUT | |
---|---|---|
Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Premium received in your account when you sell the Put Option. |
Maximum Loss Scenario | Premium Paid | Unlimited (When the price of the underlying falls.) |
Risk | Limited | Unlimited |
Reward | Unlimited | Limited |
LONG CALL Vs SHORT PUT - Strategy Pros & Cons
LONG CALL | SHORT PUT | |
---|---|---|
Similar Strategies | Protective Put | Bull Put Spread, Short Starddle |
Disadvantage | • In this strategy, there is not protection against the underlying stock falling in value. • 100% loss if the strike price, expiration dates or underlying stocks are badly chosen. | • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. |
Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • Benefit from time decay. • Less capital required than buying the stock outright. • Profit when underlying stock price rise, move sideways or drop by a relatively small account. |