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Buy one call option and buy one put option at a higher strike price.
Maximum Loss: Limited to the total premium paid for the call and put options.
Maximum Gain: Unlimited as the market moves in either direction.
When to use: When you are bullish on volatility but are unsure of market direction.
A long guts has the same profile as a Long Strangle. The difference is that with a guts you only buy ITM options. A strangle you buy OTM options.
I see what you're saying and it would be true if the call were purchased at a higher strike price. However, I say that the put is purchased with a higher strike price, not the call.
So, the definition is for the put to have a higher strike price AND for both options to be ITM.
Know what I mean?
Let me know if I am correct else please give me a explanation.
Thank you