Name of Option Position?

Discussion in 'Options' started by oldtime, Jul 28, 2011.

  1. Last time somebody asked this questions the answers were "Who cares?" and "Get a book."

    It's basically just a short straddle with a UL in between. 2 x 1 (or 1 x 2 depending on how you look at it.)

    The idea is I'm long term bullish but not expecting anything spectacular short term. So from the top down it's

    short 2 otm calls
    long 1 ul
    short 2 otm puts

    I know I'll get hurt if ul gets close to strike, but that's a risk I'm willing to take.

    All I want to know is if there's a name for it.
     
  2. Don't know if there is a name but 2 short puts+1 covered call (long UL and short call) = 3 short puts at different strikes. That leaves the extra short call.
     
  3. Risky?
     
  4. Why does it need a name? You're long underlying and short strangles. That's what it's called. You could also say that you're short a one-lot synthetic straddle (call-strike) and short two-lot in puts.
     
  5. I think Option Coach had a name for an unbalanced strangle in his book.

    I'll go look it up. /brb

    Edit: He calls them straps and strips depending on whether it has extra calls or puts.
     
  6. ok, let me think about it.
     
  7. The position will dissect to a two-lot covered call if the puts are near-ATM (static). Further OTM on puts reduces the upside deltas. Do you really want to be in a CC if you're bullish?

    I would suggest a "married straddle" if you want to be long and earn on a vol-drop or decay. Long 100 UL and short 1 ATM straddle. Less gamma and heartache if you're wrong.
     
  8. No, I just want to be flat out long, but even the minimum contract is too volatile for my account (and I probably shouldn't even be trading it) so I have to give up something somewhere.

    Give me some time to think about it. I need to go figure out what PNL distribution is.
     
  9. Isn't that still two short puts?
     
  10. PNL - P&L - the profit/loss graph at expiration.

    If you just want to be long stock try short put+long call, but the stock needs to move before expiration. Cheaper than buying stock but they don't last forever, plus you get the same downside as naked long stock.
     
    #10     Jul 28, 2011