Short strangles vs. short guts?

(a short gut is a short 'strangle', but selling in-the-money options)

 

Have you ever ralphed after putting one on?

 

Your point? The difference between the two is the box arbitrage, hence they are equivalent. Short guts is the inside strangle; short otm is the outside strangle.

 

I know, thanks.

I want to know some practical differences.

 

You know? Then you know there aren't any differences.

 

Are they margined the same if the risk profile is the same? Does the guts tie up more money than the strangle? Just curious.

 

Identical risk-profile as defined by the box arbitrage. A long(short) outside strangle combined with a short(long) inside strangle results in a box.

I can't answer your question about broker req. RegT requires the same margin if shorting, but individual broker reqs may differ. A long guts strangle will require a larger debit outlay under regT. SPAN margin should be the same for the inside and outside strangles.