« Long Strip - A Great Bear Market Strategy [Intro] »

A large number of TheMarketMessenger.com Options Trading Picks over the past year have featured the 'Long Strip' options strategy. A vast majority of these picks have done extremely well and that is little surprise given that the Long Strip strategy is one that is perfectly catered to bear market situations.

Over the coming week, we're going to feature a few short options education articles that will provide a clear illustration of the Long Strip strategy, which intermediate and advanced options traders will recognize as a variant of the basic Long Straddle options strategy.

The primary difference between a Long Straddle and a Long Strip is that while each of these options strategies consists of a Calls-leg and a Puts-leg on the same strike price, the Long Strip consists of twice as many Calls as Puts, while the Long Straddle consists of an equal number of each.

We'll take a closer look at why the Long Strip is an apt strategy for bear markets in the next few days. In the meantime, take a look at the diagrams below that depict the basic payoffs of a Long Straddle and a Long Strip, respectively. 

Long Straddle options strategy - Basic Payoff Diagram (at expiration) Long Strip (contrast w/ Long Straddle) options strategy - Basic Payoff Diagram (at expiration)

Have a good weekend!

Cheers,

Asher

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Other articles in this series:

Long Strip - A Great Bear Market Strategy [Part 1]

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