Strap
Two calls and one put at the same strike: a straddle that pays more on a rise.
Big move2 legsDebit
Illustrative: underlying at 100, strikes every 2.5, 45 days to expiry, implied volatility 25%, model prices. One lot = 100 shares.
Key figures
| Opens for | a debit of $1,077 |
|---|---|
| Max profit | Open-ended as the price rises |
| Max loss | −$1,077 |
| Break-evens | 89.23 and 105.39 |
| Position delta today | +63 shares |
| Outlook | Big move |
The legs
| Action | Quantity | Option | Model price |
|---|---|---|---|
| Buy | 2 | 100 call, 45 days | 3.77 |
| Buy | 1 | 100 put, 45 days | 3.22 |
How it works
Two calls and one put at the same strike: a straddle that pays more on a rise. These structures care more about how far the price moves than which way. Long versions pay when the move is large; short versions collect premium when the price stays put.
When it fits
It suits a view that the underlying moves a long way, in either direction or the direction the structure leans to, before expiry.
What can go wrong
The most it can lose at expiry in this example is −$1,077. Bought options lose value as time passes, so the move has to come before expiry.
Building it in Trident
In the Strategy Lab, choose strap and the days to expiry. Trident applies these strike rules to your live chain, prices each leg and draws the trade on the risk graph, where you can drag the days to expiry, change implied volatility or switch on the crash band. When it looks right, send it to order management; nothing reaches your broker until you send it.
Frequently asked questions
What is a strap?
Two calls and one put at the same strike: a straddle that pays more on a rise.
What is the maximum loss on a strap?
In this illustrative example it is −$1,077 for one lot at expiry.
Where does a strap break even?
With the underlying at 100 in this illustrative example, the break-even at expiry is 89.23 and 105.39.
Can I build a strap in Trident?
Yes. Pick it in the Strategy Lab and Trident chooses the strikes from your live chain, prices the legs and draws it on the risk graph.
Illustrative example with model prices, not a recommendation. Options carry risk of loss. See the risk disclosure.