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Bullish

Short Guts

Short Guts

Components

Sell one call option and sell one put option at a higher strike price.

Risk / Reward

Maximum Loss: Unlimited as the market moves in either direction.

Maximum Gain: Limited to the net premium received for selling the options.

Characteristics

A short guts has the same profile as a Short Strangle except a guts strategy involves ITM options, whereas a strangle trades OTM options.

Comments (2)

Joel

January 21st, 2009 at 3:47am

Depends on the premiums of both strategies. Guts would be more expensive as they are ITM options.

Deepak

January 19th, 2009 at 10:25am

how to make choice bet strangle and gut ?

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