1. What it is
Standard: sell a lower put, sell a higher call and buy a still-higher call. The reverse version uses a naked call and a put credit spread.
2. Why use it
Combine a naked put with a call credit spread for asymmetric premium exposure.
3. How the numbers work
View example
- Sell 1 × Put · Strike 95
- Sell 1 × Call · Strike 105
- Buy 1 × Call · Strike 110
All option legs have the same expiration.
- Option premium received
- 6
- Expiration breakeven
- 89
- Maximum expiration profit
- 6
- Maximum expiration loss
- 89
- Underlying at expiration 100 → Profit 6
- Underlying at expiration 110 → Profit 1
4. How it changes
The standard version is commonly positive theta and negative vega and gamma around its profitable range, with bullish directional exposure from the put.
5. What to watch for
Only a total credit at least as large as the call-spread width removes the standard version's expiration upside loss. The naked put still has large downside risk. The reverse version has uncovered-call upside risk.
The example credit is hypothetical. A preset does not guarantee enough credit to remove one tail loss; compare the actual credit with the protected spread width.
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.