Long Guts
Components
Buy one call option and buy one put option at a higher strike price.
Risk / Reward
Maximum Loss: Limited to the total premium paid for the call and put options.
Maximum Gain: Unlimited as the market moves in either direction.
Characteristics
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.
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