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 ?
First, a stiff heavy collar just on my neck, and a bridle with great side-pieces against my eyes called blinkers, and blinkers indeed they were, for I could not see on either side, but only straight in front of me; next, there was a small saddle with a nasty stiff strap that went right under my tail; that was the crupper.
Then she ran after the coach which she overtook after an hour's chase, sprang up behind and held on to the straps.
By and by Melanthius came out with a helmet in one hand, and an old dry-rotted shield in the other, which had been borne by Laertes when he was young, but which had been long since thrown aside, and the straps had become unsewn; on this the two seized him, dragged him back by the hair, and threw him struggling to the ground.
Then they undressed him as they had done the first, laid him on their bed and bound him with the straps which composed the bed -- the bedstead being of oak.
Ascribe it all to that fatal, heart-thrilling, hope-inspiring 'yes,' loveliest of human females," continued Tom, kneeling with some caution, lest the straps of his pantaloons should give way--"Impute all to your own lucid ambiguity, and to the torments of hope that I experience.
But, when these embarrassing points were satisfactorily arranged, he would shoulder his axe and his rifle, slip his arms through the straps of his pack, and enter the woods with the tread of a Hercules.
The Doctor immediately repaired to his wardrobe, and soon returned with a black dress coat, made in Jennings' best manner, a pair of sky-blue plaid pantaloons with straps, a pink gingham chemise, a flapped vest of brocade, a white sack overcoat, a walking cane with a hook, a hat with no brim, patent-leather boots, straw-colored kid gloves, an eye-glass, a pair of whiskers, and a waterfall cravat.
It appeared to be a queer, superannuated coffer, of painted wood, with elaborate handles and shriveled straps and with the color(it had last been endued with a coat of light green) much rubbed off.
He had prepared a sort of collar of leather with many straps depending from it.
I have been a failure," said Miss Bartlett, as she struggled with the straps of Lucy's trunk instead of strapping her own.
The reaping-machine left the fallen corn behind it in little heaps, each heap being of the quantity for a sheaf; and upon these the active binders in the rear laid their hands--mainly women, but some of them men in print shirts, and trousers supported round their waists by leather straps, rendering useless the two buttons behind, which twinkled and bristled with sunbeams at every movement of each wearer, as if they were a pair of eyes in the small of his back.
I thought he was very strange, or at least that what I could see of him was very strange, for he was wrapped up to the chin, and his face was almost hidden in a fur cap with broad fur straps at the side of his head fastened under his chin; but I was composed again, and not afraid of him.