Strap


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Strap

A relatively simple trading strategy that involves buying a set of options, two calls and one put, with the same strike price and expiration date on a stock. The strap is a more focused version of the straddle, and is popular due to its unlimited profit, limited risk nature. The maximum loss that a strap can incur occurs when the equity price on the expiration date of the options is the same as the price on the date the options were purchased. In this case, the loss is equal to the sum the three-option set was purchased for. However, with any deviation in the price either up or down, the strategy recovers at least some of the cost of purchasing the options. See: Strip, Straddle

Strap

A bullish investment strategy in which an investor holds two calls and one put on the same underlying asset with the same expiration date and strike price. An investor uses a strap when he/she believes that the price of the underlying will increase substantially. If it does, the investor stands to make a substantial profit by exercising the calls. On the other hand, if the underlying decreases in price, the investor will not suffer a substantial loss because the strike price of the put protects him/her. See also: Call backspread ratio.

strap

A combination option made up of two calls and one put. The buyer of a strap profits from large variations in the price of the underlying asset, especially if it moves upward.
References in classic literature ?
Those who have never had a bit in their mouths cannot think how bad it feels; a great piece of cold hard steel as thick as a man's finger to be pushed into one's mouth, between one's teeth, and over one's tongue, with the ends coming out at the corner of your mouth, and held fast there by straps over your head, under your throat, round your nose, and under your chin; so that no way in the world can you get rid of the nasty hard thing; it is very bad
Dig--dig--dig--until an impatient movement from one of the two passengers would admonish him to pull up the window, draw his arm securely through the leathern strap, and speculate upon the two slumbering forms, until his mind lost its hold of them, and they again slid away into the bank and the grave.
You wouldn't say so if you had seen him chas- ing me upstairs with a hard leather strap," he said; "I haven't forgotten it in sixteen years.
When they returned to the castle the Wicked Witch beat them well with a strap, and sent them back to their work, after which she sat down to think what she should do next.
Dummling did not think long, but went straight into the forest, where in the same place there sat a man who was tying up his body with a strap, and making an awful face, and saying: 'I have eaten a whole ovenful of rolls, but what good is that when one has such a hunger as I?
The long strap which ran from the driving-wheel of his engine to the red thresher under the rick was the sole tie-line between agriculture and him.
We finally agreed that Tars Tarkas should return along the branch, leaving his longest leather harness strap with me, and that when the limb had risen to a height that would permit me to enter the cave I was to do so, and on Tars Tarkas' return I could then lower the strap and haul him up to the safety of the ledge.
I never brought her up at all, except to give her a lick of a strap now and again.
Thus it came about that, by the time he had reached the other bank with his load, the Friar's sword belt was loose albeit he knew it not; so when Robin stood on dry land and the Friar leaped from his back, the yeoman gripped hold of the sword so that blade, sheath, and strap came away from the holy man, leaving him without a weapon.
The young man arrested Bert with a gesture, took hold of a strap, lifted up a panel in the padded wall, and a window appeared.
So the soldiers, after a twenty-mile march, were kept mending and cleaning all night long without closing their eyes, while the adjutants and company commanders calculated and reckoned, and by morning the regiment- instead of the straggling, disorderly crowd it had been on its last march the day before- presented a well-ordered array of two thousand men each of whom knew his place and his duty, had every button and every strap in place, and shone with cleanliness.
Upon his already jewel-encrusted harness, to the strap that crossed his great chest beneath which beat his loyal heart, Carthoris, Prince of Helium, fastened the gleaming thing that Thuvia of Ptarth had worn, and wearing, had made holy to the Heliumite.