Long Combo

Long Combo is a bullish strategy.

It involves selling an “Out-of-the-Money” (lower strike) Put Option and buying an “Out-of-the-Money” (higher strike) Call Option. Both options must have the same underlying security and expiration month.

It is an inexpensive trade, similar in pay-off of Long Stock, except there is a gap between the strikes.

As the stock price rises the strategy starts making profits.

Investor view: Bullish on the Stock/ Index.

Risk: Unlimited.

Reward: Unlimited.

Breakeven: Strike price of Long Call + net premium paid (in case there is outflow) or Strike price of ShortPut – net premium received (in case there is inflow).

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