SHORT STRANGLE	PROTECTIVE PUT
About Strategy	Short Strangle Option Strategy  This strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if Read more..	Protective Put Option Strategy Protective Put Strategy is a hedging strategy where trader guards himself from the downside risk. This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside. He will buy one ATM Put Option to hedge his position. Now, if the underlying asset moves either up or down, the trader is in a safe position. Read more..

SHORT STRANGLE Vs PROTECTIVE PUT - Details

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

SHORT STRANGLE Vs PROTECTIVE PUT - When & How to use ?

	SHORT STRANGLE	PROTECTIVE PUT
Market View	Neutral	Bullish
When to use?	This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile.	This strategy is adopted when a trader is long on the underlying asset but skeptical of the downside.
Action	Sell OTM Call, Sell OTM Put	Buy 1 ATM Put
Breakeven Point	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Purchase Price of Underlying + Premium Paid

SHORT STRANGLE Vs PROTECTIVE PUT - Risk & Reward

	SHORT STRANGLE	PROTECTIVE PUT
Maximum Profit Scenario	Maximum Profit = Net Premium Received	Price of Underlying - Purchase Price of Underlying - Premium Paid
Maximum Loss Scenario	Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received	Premium Paid + Purchase Price of Underlying - Put Strike + Commissions Paid
Risk	Unlimited	Limited
Reward	Limited	Unlimited

SHORT STRANGLE Vs PROTECTIVE PUT - Strategy Pros & Cons

	SHORT STRANGLE	PROTECTIVE PUT
Similar Strategies	Short Straddle, Long Strangle	Long Call, Call Backspread
Disadvantage	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.	• Value of protective put position decreases as time passes • Holding period of the protective put can be affected by the timing as a result tax rate on the profit or loss from the stock can be affected.
Advantages	• Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range.	• Unlimited potential profit due to indefinitely rise in the underlying stock price . • This strategy allows you to hold on to your stocks while insuring against losses. • Hedging strategy, trader can guard himself from the downside risk.