Strap option strategy
The Strap is high volatility strategy with more bias towards Upside.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ATM Call | 25,150 | 2 | 130 | ₹113.01 |
| BUY | ATM Put | 25,150 | 1 | 65 | ₹112.11 |
How it works
- Buy 2 ATM calls at the 25,150 strike for ₹113.01 each, paying the premium.
- Buy 1 ATM put at the 25,150 strike for ₹112.11, paying the premium.
- You pay a net ₹21,978 upfront for the position. This is the most you can lose.
Below 24,812 you profit, and profit grows as Nifty falls.
Between 24,812 and 25,319 you lose, up to ₹21,861.
Above 25,319 you profit, and profit keeps growing as Nifty rises.
Set-up: Buy 2 lots ATM Call and 1 lot ATM Puts with same expiration. Strategy is expensive compare to Straddle and it requires explosive move mostly on upside.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | +₹75,522 |
| 24,400 | −3% | +₹26,772 |
| 24,900 | −1% | −₹5,728 |
| 25,150 | Unchanged | −₹21,978 |
| 25,400 | +1% | +₹10,522 |
| 25,900 | +3% | +₹75,522 |
| 26,650 | +6% | +₹1,73,022 |
How the Greeks affect it
When to use
Strap is neutral to bullish Strategy. You are looking for increasing volatility with the stock price moving explosively in either direction, preferably to the upside.
- With Neutral to Bullish outlook, one can participate in either ways surge in volatility preferably volatility on Upside. Ideal to trade when implied volatility is at lower end, lower option prices and is expected to increase exponentially with bias on upside.
Things to watch
- Time decay is harmful to Strap. Time day accelerates exponentially in last week of expiry. Cost to establish Strap is significantly high. If stock fails to give desired move, one can lose the premium.
Strap: questions
What is a Strap strategy?
The Strap is high volatility strategy with more bias towards Upside.
When should you use a Strap?
Strap is neutral to bullish Strategy. You are looking for increasing volatility with the stock price moving explosively in either direction, preferably to the upside.
How do you set up a Strap?
Buy 2 lots ATM Call and 1 lot ATM Puts with same expiration. Strategy is expensive compare to Straddle and it requires explosive move mostly on upside.
What is the maximum profit of a Strap?
Maximum Profit is unlimited. However profit is more skewed on upside as we bought double the number of Calls. Profitability improves at double the speed on upside. The BEP to the downside is the strike minus the net debit, which is more than the Straddle because we�ve bought double the amount of Calls.
What is the maximum loss of a Strap?
It is Net debit Strategy as you have bought both Call & Put. Strap is more expensive than usual Straddle for the extra Call it possess.
What is the breakeven of a Strap?
With Nifty at 25,151, the example on this page breaks even at 24,812 and 25,319 at expiry.
