Strip

High profits if the price falls sharply, reasonable profits if the price rises

The Strip is similar to Straddle and Strap in terms of betting on rising volatility. The Strip usually consists of one call option and two put options with the same strike price and the same expiration.

You can think of the Strip as 🐻 a bearish Straddle 🐻: “I don’t care what the price will be, but if it changes significantly in either direction during the period of holding Strip, I win. And I win even more if the increase in volatility leads to a drop in the price of the asset.”

The Strip has a limited cost and unlimited potential profit.

Buying one Strip is equal to buying three ATM options - two ATM puts and one ATM call.