STRIPS, STRAPS, STRADDLE, STRANGLE

A

abhishreshthaa

Abhijeet S
WHAT ARE STRIPS:

  • Strips consists of a long position in 1 call & 2 puts with the same exercise price and expiration date.

  • In this the investor is betting that there will be big stock price move and considers a decrease in the stock more likely than an increase.


WHAT ARE STRAPS:

  • Straps consists of a long position in 2 calls & 1 put with the same strike price and expiration date.

  • In this the investor is betting that there will be big stock price move and considers an increase in the stock more likely than an decrease.

Straddle:

  • LONG STRADDLE

  • SHORT STRADDLE

LONG STRADDLE

  • The strategy is buy a call and put options on the same stock with the same exercise price and expiration date.

  • The straddle is appropriate when the investor expects a large move in the stock price but is unsure in which direction the price will move

Strangle

  • Long Strangle

  • Short Strangle
 
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