In the following table, we will summarize several commonly used trading strategies involving various types of options:
Names |
Description |
Direction of initial cash flow |
Expectation of future price movement |
---|---|---|---|
Outflow |
Rise | ||
Inflow |
Rise | ||
Outflow |
Fall | ||
Inflow |
Fall | ||
Straddle |
Outflow |
Rise or fall | |
Strip |
Outflow |
prob (fall) > prob (rise) | |
Strap |
Outflow |
prob (rise) > prob (fall) | |
Strangle |
Outflow |
rise or fall | |
Butterfly with calls | ... |