Compare Trading Platform Synthetic Call and Long Straddle (Buy Straddle). Find similarities and differences between Synthetic Call and Long Straddle (Buy Straddle) Trading Softwares. Find the most powerful trading platform. Find which trading software is better among Synthetic Call and Long Straddle (Buy Straddle).
| Synthetic Call | Long Straddle (Buy Straddle) | |
|---|---|---|
 |  | |
| About Strategy | A Synthetic Call strategy is used by traders who are currently holding the underlying asset and are Bullish on it for the long term. But he is also worried about the downside risks in near future. This strategy offers unlimited reward potential with limited risk.
The strategy is used by buying PUT OPTION of the underlying you are holding for long. If the price of the underlying rises then you make profits on holdings. If it falls then your loss will be limited to the premium paid for PUT OPTION. Read More | The Long Straddle (or Buy Straddle) is a neutral strategy. This strategy involves simultaneously buying a call and a put option of the same underlying asset, same strike price and same expire date.
A Long Straddle strategy is used in case of highly volatile market scenarios wherein you expect a big movement in the price of the underlying but are not sure of the direction. Such scenarios arise when company declare results, budget, war-like situation etc.
This is an unlimited profit and limited risk strategy. The profit earns in this strategy is unlimited. Higher volatility results in higher profits. The maximum loss is limited to the net premium paid. The max loss occurs when underlying asset price on expire remains at the strike price.
Read More |
| Market View | Bullish | Neutral |
| Strategy Level | Beginners | Beginners |
| Options Type | Call + Underlying | Call + Put |
| Number of Positions | 2 | 2 |
| Risk Profile | Limited | Limited |
| Reward Profile | Unlimited | Unlimited |
| Breakeven Point | Underlying Price + Put Premium | 2 break-even points |
| Synthetic Call | Long Straddle (Buy Straddle) | |
|---|---|---|
| When to use? | A Synthetic Call option strategy is when a trader is Bullish on long term holdings but is also concerned with the associated downside risk. | The strategy is perfect to use when there is market volatility expected due to results, elections, budget, policy change, war etc. |
| Market View | Bullish | Neutral When you are not sure on the direction the underlying would move but are expecting the rise in its volatility. |
| Action |
The strategy is used by buying PUT OPTION of the underlying you're holding for long. If the price of the underlying rises then you make profits on holdings. If it falls then your loss will be limited to the premium paid for PUT OPTION. |
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| Breakeven Point | Underlying Price + Put Premium | 2 break-even points A straddle has two break-even points. Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium |
| Synthetic Call | Long Straddle (Buy Straddle) | |
|---|---|---|
| Risks | Limited Maximum loss happens when price of the underlying moves above strike price of Put. Max Loss = Premium Paid | Limited The maximum loss for long straddle strategy is limited to the net premium paid. It happens the price of underlying is equal to strike price of options. Maximum Loss = Net Premium Paid |
| Rewards | Unlimited Maximum profit is realized when price of underlying moves above purchase price of underlying plus premium paid for Put Option. Profit = (Current Price of Underlying - Purchase Price of Underlying) - Premium Paid
| Unlimited There is unlimited profit opportunity in this strategy irrespective of the direction of the underlying. Profit occurs when the price of the underlying is greater than strike price of long Put or lesser than strike price of long Call. |
| Maximum Profit Scenario | Underlying goes up | Max profit is achieved when at one option is exercised. |
| Maximum Loss Scenario | Underlying goes down and option exercised | When both options are not exercised. This happens when underlying asset price on expire remains at the strike price. |
| Synthetic Call | Long Straddle (Buy Straddle) | |
|---|---|---|
| Advantages | Provides protection to your long term holdings. | Earns you unlimited profit in a volatile market while minimizing the loss. |
| Disadvantage | You can incur losses if underlying goes down and the option is exercised. | The price change has to be bigger to make good profits. |
| Simillar Strategies | Married Put | Long Strangle, Short Straddle |
| Compare |
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