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Comparision (SHORT PUT VS SHORT STRADDLE)

 

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  SHORT PUT SHORT STRADDLE
About Strategy

Short Put Option Strategy

A 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.

Short Straddle Option strategy

This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..

SHORT PUT Vs SHORT STRADDLE - Details

SHORT PUT SHORT STRADDLE
Market View Bullish Neutral
Type (CE/PE) PE (Put Option) CE (Call Option) + PE (Put Option)
Number Of Positions 1 2
Strategy Level Beginners Advance
Reward Profile Limited Limited
Risk Profile Unlimited Unlimited
Breakeven Point Strike Price - Premium Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT PUT Vs SHORT STRADDLE - When & How to use ?

SHORT PUT SHORT STRADDLE
Market View Bullish Neutral
When to use? This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action Sell Put Option Sell Call Option, Sell Put Option
Breakeven Point Strike Price - Premium Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium

SHORT PUT Vs SHORT STRADDLE - Risk & Reward

SHORT PUT SHORT STRADDLE
Maximum Profit Scenario Premium received in your account when you sell the Put Option. Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario Unlimited (When the price of the underlying falls.) Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk Unlimited Unlimited
Reward Limited Limited

SHORT PUT Vs SHORT STRADDLE - Strategy Pros & Cons

SHORT PUT SHORT STRADDLE
Similar Strategies Bull Put Spread, Short Starddle Short Strangle
Disadvantage • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages • 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. • A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .

SHORT PUT

SHORT STRADDLE