Strap

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

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

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

The Strap has a limited cost and unlimited potential profit.

Buying one Strap is like buying three ATM options at the same time - two ATM calls and one ATM put.