Compare Strategies
SHORT CALL | SHORT PUT | |
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About Strategy |
Short Call Option StrategyA trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders. However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited. If the strategy |
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. |
SHORT CALL Vs SHORT PUT - Details
SHORT CALL | SHORT PUT | |
---|---|---|
Market View | Bearish | Bullish |
Type (CE/PE) | CE (Call Option) | PE (Put Option) |
Number Of Positions | 1 | 1 |
Strategy Level | Advance | Beginners |
Reward Profile | Limited | Limited |
Risk Profile | Unlimited | Unlimited |
Breakeven Point | Strike Price of Short Call + Premium Received | Strike Price - Premium |
SHORT CALL Vs SHORT PUT - When & How to use ?
SHORT CALL | SHORT PUT | |
---|---|---|
Market View | Bearish | Bullish |
When to use? | It is an aggressive strategy and involves huge risks. It should be used only in case where trader is certain about the bearish market view on the underlying. | This strategy works well when you're Bullish that the price of the underlying will not fall beyond a certain level. |
Action | Sell or Write Call Option | Sell Put Option |
Breakeven Point | Strike Price of Short Call + Premium Received | Strike Price - Premium |
SHORT CALL Vs SHORT PUT - Risk & Reward
SHORT CALL | SHORT PUT | |
---|---|---|
Maximum Profit Scenario | Max Profit = Premium Received | Premium received in your account when you sell the Put Option. |
Maximum Loss Scenario | Loss Occurs When Price of Underlying > Strike Price of Short Call + Premium Received | Unlimited (When the price of the underlying falls.) |
Risk | Unlimited | Unlimited |
Reward | Limited | Limited |
SHORT CALL Vs SHORT PUT - Strategy Pros & Cons
SHORT CALL | SHORT PUT | |
---|---|---|
Similar Strategies | Covered Put, Covered Calls | Bull Put Spread, Short Starddle |
Disadvantage | • Unlimited risk to the upside underlying stocks. • Potential loss more than the premium collected. | • Unlimited risk. • Huge losses if the price of the underlying stock falls steeply. |
Advantages | • With the help of this strategy, traders can book profit from falling prices in the underlying asset. • Less investment, more profit. • Traders can book profit when underlying stock price fall, move sideways or rise by a small amount. | • 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. |