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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