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Comparision (SHORT STRADDLE VS LONG CALL)

 

Compare Strategies

  SHORT STRADDLE LONG CALL
About Strategy

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

Long Call Option Strategy

This 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.

SHORT STRADDLE Vs LONG CALL - Details

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

SHORT STRADDLE Vs LONG CALL - When & How to use ?

SHORT STRADDLE LONG CALL
Market View Neutral 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.)
When to use? 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. This strategy work when an investor expect the underlying instrument move in upward direction.
Action Sell Call Option, Sell Put Option Buying Call option
Breakeven Point Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium Strike price + Premium

SHORT STRADDLE Vs LONG CALL - Risk & Reward

SHORT STRADDLE LONG CALL
Maximum Profit Scenario Max Profit = Net Premium Received - Commissions Paid Underlying Asset close above from the strike price on expiry.
Maximum Loss Scenario Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received Premium Paid
Risk Unlimited Limited
Reward Limited Unlimited

SHORT STRADDLE Vs LONG CALL - Strategy Pros & Cons

SHORT STRADDLE LONG CALL
Similar Strategies Short Strangle Protective Put
Disadvantage • Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur. • 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.
Advantages • 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 . • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock.

SHORT STRADDLE

LONG CALL