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 periodicals archive ?
I asked a fit, thirtysomething blonde who parked in a disabled bay at a shopping centre last week if she realised her error and was met with an indignant strop my four-year-old would be proud of.
IT was the briefest of public family reunions, unceremoniously called to a halt when Jim Corr went from pop star to strop star.
DISCIPLINE: Pascal Chimbonda was fined two weeks' wages and told he has no future at the club after his strop down the tunnel at Wembley during the Carling Cup Final.
DJ Anne Savage has revealed that Paris Hilton threw a strop when she DJ-ed for her.
But after we pounced on the baffled midget with a camera, he threw a strop and marched off.
Lottie The Strop strikes me as a girl who needs the limelight and, even if her singing career continues to flatline, I'm sure she'll turn up somewhere else.
The blonde drag queen was booked to DJ at London's Mint Leaf on Tuesday night, but less than five minutes into her set pulled a huge strop.
DIVA Jennifer Lopez is in a strop with singer hubby Marc Anthony over his DVD collection.
A local farmer and a team from the Environment Agency also used their tractors and a trailer to help lift the horse to safety with strops and a lifting bridle attached to its body.
Firefighters put strops around the stricken animal and used a crane to lift it off the fence.
03am, and firefighters from Porthmadog, Caernarfon and Bangor used strops and ropes to lift out Shay, who stands 15 hands high.
Remember Leo Sayer and his prima donna strops, Jade Goody herself exposed as the nonentity she really is, Les Dennis and Vanessa Feltz cracking under the strain.