1. What it is
Call version: sell one lower-strike call and buy two higher-strike calls. Put version: sell one higher-strike put and buy two lower-strike puts.
2. Why use it
Buy more options than you sell to seek a large directional move.
3. How the numbers work
View example
- Sell 1 × Call · Strike 100
- Buy 2 × Call · Strike 105
All option legs have the same expiration.
- Option premium received
- 1
- Expiration breakeven
- 101 / 109
- Maximum expiration profit
- Theoretically unlimited
- Maximum expiration loss
- 4
- Underlying at expiration 100 → Profit 1
- Underlying at expiration 110 → Profit 1
4. How it changes
The extra long options can create positive gamma and vega, but net exposures vary by price. Time decay can deepen the valley near the long strikes.
5. What to watch for
A moderate move toward the doubled long strike can be worse than no move. The call version has unlimited upside profit; the put version's downside profit is bounded by zero.
Receiving a credit does not make the position risk free. Identify the loss valley and how far price must travel to escape it.
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.