Compare Trading Platform Long Strangle (Buy Strangle) and Long Call Butterfly. Find similarities and differences between Long Strangle (Buy Strangle) and Long Call Butterfly Trading Softwares. Find the most powerful trading platform. Find which trading software is better among Long Strangle (Buy Strangle) and Long Call Butterfly.
| Long Strangle (Buy Strangle) | Long Call Butterfly | |
|---|---|---|
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| About Strategy | The Long Strangle (or Buy Strangle or Option Strangle) is a neutral strategy wherein Slightly OTM Put Options and Slightly OTM Call are bought simultaneously with same underlying asset and expiry date.
This strategy can be used when the trader expects that the underlying stock will experience significant volatility in the near term.
It is a limited risk and unlimited reward strategy. The maximum loss is the net premium paid while maximum profit is achieved when the underlying moves either significantly upwards or downwards at expiration.
The usual Long Strangle Strategy looks like as below for NIFTY current index value at 10400 (NIFTY Spot Price):
Options Strangle Orders
OrdersNIFTY Strike Price
Buy 1 Slightly OTM PutN Read More | Long Call Butterfly is a neutral strategy where very low volatility in the price of underlying is expected. The strategy is a combination of bull Spread and bear Spread. It involves Buy 1 ITM Call, Sell 2 ATM Calls and Buy 1 OTM Call. The strike prices of all Options should be at equal distance from the current price.
Suppose Nifty is currently trading at 10400. You expect very little volatility in it. You can implement the Long Call Butterfly by buying 1 ITM Call Option at 10300, selling 2 ATM Nifty Call Options at 10400, buying 1 OTM Call Option at 10500. Ensure that strike prices of Options are at equidistance. Your loss will be limited to the net premium paid on 4 positions while profit will be limited to strike price of short calls. Read More |
| Market View | Neutral | Neutral |
| Strategy Level | Beginners | Advance |
| Options Type | Call + Put | Call |
| Number of Positions | 2 | 4 |
| Risk Profile | Limited | Limited |
| Reward Profile | Unlimited | Limited |
| Breakeven Point | two break-even points | |
| Long Strangle (Buy Strangle) | Long Call Butterfly | |
|---|---|---|
| When to use? | A Long Strangle is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc. | This strategy should be used when you're expecting no volatility in the price of the underlying. |
| Market View | Neutral When you are unsure of the direction of the underlying but expecting high volatility in it. | Neutral Neutral on the underlying asset and bearish on the volatility. |
| Action |
Suppose Nifty is currently at 10400 and you expect the price to move sharply but are unsure about the direction. In such a scenario, you can execute long strangle strategy by buying Nifty at 10600 and at 10800. The net premium paid will be your maximum loss while the profit will depend on how high or low the index moves. |
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| Breakeven Point | two break-even points A Options Strangle strategy has two break-even points. Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium | Upper Breakeven = Higher Strike Price - Net Premium Lower Breakeven = Lower Strike Price + Net Premium |
| Long Strangle (Buy Strangle) | Long Call Butterfly | |
|---|---|---|
| Risks | Limited Max Loss = Net Premium Paid The maximum loss is limited to the net premium paid in the long strangle strategy. It occurs when the price of the underlying is trading between the strike price of Options. | Limited Risk in the Long Call Butterfly options strategy is limited to the net premium paid. |
| Rewards | Unlimited Maximum profit is achieved when the underlying moves significantly up and down at expiration. Profit = Price of Underlying - Strike Price of Long Call - Net Premium Paid Or Profit = Strike Price of Long Put - Price of Underlying - Net Premium Paid | Limited Rewards in the Long Call Butterfly options strategy is limited to the adjacent strikes minus net premium debit. |
| Maximum Profit Scenario | One Option exercised | Only ITM Call exercised |
| Maximum Loss Scenario | Both Option not exercised | All options exercised or all options not exercised. |
| Long Strangle (Buy Strangle) | Long Call Butterfly | |
|---|---|---|
| Advantages | Profit earning strategy with limited risk in a less volatile market. | |
| Disadvantage | The strategy requires significant price movements in the underlying to gain profits. | Premiums and brokerage paid on multiple position may eat your profits. |
| Simillar Strategies | Long Straddle, Short Strangle |
| Compare |
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