Compare Strategies
LONG CALL | LONG STRADDLE | |
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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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Long Straddle Option StrategyStraddle is neither bullish nor bearish strategy; it is a market neutral strategy. Here a trader wishes to take advantage of the volatility in the market. This strategy involves buying of one Call option and one Put option of the same strike price, same expiry date and of the same underlying asset. Now a trader is bound to make profits once stock moves in either direc .. |
LONG CALL Vs LONG STRADDLE - Details
LONG CALL | LONG STRADDLE | |
---|---|---|
Market View | Bullish | Neutral |
Type (CE/PE) | CE (Call Option) | CE (Call Option) + PE (Put Option) |
Number Of Positions | 1 | 2 |
Strategy Level | Beginner Level | Beginners |
Reward Profile | Unlimited | Unlimited |
Risk Profile | Limited | Limited |
Breakeven Point | Strike Price + Premium | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium |
LONG CALL Vs LONG STRADDLE - When & How to use ?
LONG CALL | LONG STRADDLE | |
---|---|---|
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.) | Neutral |
When to use? | This strategy work when an investor expect the underlying instrument move in upward direction. | This options strategy is work well when and investor market view is bearish. The strategy minimizes your risk in the event of prime movements going against your expectations. |
Action | Buying Call option | Buy Call Option, Buy Put Option |
Breakeven Point | Strike price + Premium | Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call + Net Premium |
LONG CALL Vs LONG STRADDLE - Risk & Reward
LONG CALL | LONG STRADDLE | |
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Maximum Profit Scenario | Underlying Asset close above from the strike price on expiry. | Max profit is achieved when at one option is exercised. |
Maximum Loss Scenario | Premium Paid | Maximum Loss = Net Premium Paid |
Risk | Limited | Limited |
Reward | Unlimited | Unlimited |
LONG CALL Vs LONG STRADDLE - Strategy Pros & Cons
LONG CALL | LONG STRADDLE | |
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Similar Strategies | Protective Put | Bear Put Spread |
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. | • There should be continuous movement of the stock and options price for this strategy to be profitable. • Time decay hurts long option if the strike price, expiration date or underlying stock are badly chosen. |
Advantages | • Less investment, more profit. • Unlimited profit with limited risk. • High leverage than simply owning the stock. | • Unlimited potential beyond the breakeven point in either direction . • Book your profit from highly volatile stocks without determining the direction. • Limited risk, more profit. |