1. What it is
Long combo: buy an out-of-the-money call and sell an out-of-the-money put. Short combo: reverse both legs at the same expiration.
2. Why use it
Use different call and put strikes for directional exposure with a central flat region.
3. How the numbers work
View example
- Buy 1 × Call · Strike 105
- Sell 1 × Put · Strike 95
All option legs have the same expiration.
- Option premium paid
- 1
- Expiration breakeven
- 106
- Maximum expiration profit
- Theoretically unlimited
- Maximum expiration loss
- 96
- Underlying at expiration 100 → Loss 1
- Underlying at expiration 110 → Profit 4
4. How it changes
Unlike a same-strike synthetic, the two options' gamma and vega do not generally cancel. Net exposure changes as price approaches either strike.
5. What to watch for
The sold put exposes the long combo to a large decline. Reversing the combination leaves an uncovered short call with unlimited upside risk.
The gap between strikes makes the payoff different from stock or a same-strike synthetic. Include the entry cash flow when locating breakeven.
Examples use illustrative entry prices and amounts per underlying unit, before costs. Contract amounts require the contract multiplier. Expiration payoffs assume the illustrated legs remain intact; earlier position values and exercise or assignment outcomes can differ.