Strip option strategy
The Strip is high volatility strategy with more bias towards downside.
Payoff at expiry
Nifty, lot size 65 · Nifty future 22,650 · 6 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | ATM Call | 22,650 | 1 | 65 | ₹135.48 |
| BUY | ATM Put | 22,650 | 2 | 130 | ₹135.68 |
How it works
- Buy 1 ATM call at the 22,650 strike for ₹135.48, paying the premium.
- Buy 2 ATM puts at the 22,650 strike for ₹135.68 each, paying the premium.
- You pay a net ₹26,445 upfront for the position. This is the most you can lose.
Below 22,447 you profit, and profit grows as Nifty falls.
Between 22,447 and 23,057 you lose, up to ₹26,419.
Above 23,057 you profit, and profit keeps growing as Nifty rises.
Set-up: Buy 1 lot ATM Call and 2 lots ATM Puts with same expiration . Strategy is expensive as compared to Straddle and it requires explosive move mostly on downside.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,300 | −6% | +₹1,49,055 |
| 21,950 | −3% | +₹64,555 |
| 22,400 | −1% | +₹6,055 |
| 22,650 | Unchanged | −₹26,445 |
| 22,900 | +1% | −₹10,195 |
| 23,350 | +3% | +₹19,055 |
| 24,000 | +6% | +₹61,305 |
How the Greeks affect it
When to use
Strip is neutral to bearish Strategy; Ideal for traders who are anticipating an increase in volatility with the stock price moving explosively in either direction, preferably on the downside.
- With Neutral to Bearish outlook, one can participate in either ways surge in volatility preferably volatility on downside.
- Ideal to trade when implied volatility is at lower end. Beneficial when option prices are lower and expected to increase exponentially with bias on downside.
Things to watch
- Time decay is harmful to Strip. Time decay accelerates exponentially in last week of expiry.
- As cost to establish Strip is significantly high. If stock fails to give desired move, one can lose the premium.
Strip: questions
What is a Strip strategy?
The Strip is high volatility strategy with more bias towards downside.
When should you use a Strip?
Strip is neutral to bearish Strategy; Ideal for traders who are anticipating an increase in volatility with the stock price moving explosively in either direction, preferably on the downside.
How do you set up a Strip?
Buy 1 lot ATM Call and 2 lots ATM Puts with same expiration . Strategy is expensive as compared to Straddle and it requires explosive move mostly on downside.
What is the maximum profit of a Strip?
Maximum Profit is unlimited. However profit is more skewed on downside as we bought double the number of puts. Profitability improves at double the speed on downside. The BEP on the upside is the strike plus the net debit, which is more than the Straddle because we have bought double the amount of puts.
What is the maximum loss of a Strip?
It is Net debit Strategy as you have bought both Call & Put. Strip is more expensive than usual Straddle because of the extra Put within the strategy.
What is the breakeven of a Strip?
With Nifty at 22,650, the example on this page breaks even at 22,447 and 23,057 at expiry.