Strap
A straddle variant with a bullish lean — buy 2 ATM calls and 1 ATM put. Profits from a strong move either way, but more on the upside.
Profit / Loss Diagram
Strap at expiration
What is this strategy?
The Strap is the bullish mirror of the Strip: buy 2 ATM calls and 1 ATM put. The same concept with a bullish rather than bearish lean.
If the underlying rises you gain twice as fast through the two calls. If it falls you gain only $1 per dollar, through the single put. Useful when you expect a strong move with the probable direction being up — earnings with expected positive guidance, favourable macro events.
Same cost characteristics — roughly 50% more expensive than a straddle — and the same management profile as the Strip, inverted.
Construction
| Action | Instrument | Strike | Expiration | Example |
|---|---|---|---|---|
| BUY | 2 Calls | ATM | 30-60 DTE | +2 SPY May 450 Call |
| BUY | 1 Put | ATM (same strike) | Same expiry | +1 SPY May 450 Put |
Example
SPY at $450. You expect a strong move with a bullish lean. Strap at the 450 strike.
- Calls Purchased (2× 450) −$1,000 ($500 × 2)
- Put Purchased (450) −$500
- Net Debit $1,500
- Breakeven (upside) $457.50 (450 + 15.00/2, because there are two calls)
- Breakeven (downside) $435.00 (450 − 15.00)
- Profit if SPY = $500 +$8,500 (2 calls × $5,000 − $1,500 debit)
- Profit if SPY = $400 +$3,500 (1 put × $5,000 − $1,500 debit)
- Maximum Loss $1,500 (the debit) with SPY exactly at $450
The Greeks
2 calls outweigh 1 put, giving net positive delta at entry.
Same as the Strip — three long options, aggressive decay.
Same as the Strip.
Same as the Strip.
Position Management
- 01 Same as the Strip, Inverted Close before expiration, and take asymmetric profits on the calls first if the move is bullish.