STRAP	RISK REVERSAL
About Strategy	Strap Option Strategy  Strap Strategy is similar to Long Straddle, the only difference is the quantity traded. A trader will buy two Call Options and one Put Options. In this strategy, a trader is very bullish on the market and volatility on upside but wants to hedge himself in case the stock doesn’t perform as per his expectations. This strategy will make more profits compared to long straddle sin Read more..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

STRAP Vs RISK REVERSAL - Details

	STRAP	RISK REVERSAL
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	3	2
Strategy Level	Beginners	Advance
Reward Profile	Profit Achieved When Price of Underlying > Strike Price of Calls/Puts + (Net Premium Paid/2) OR Price of Underlying < Strike Price of Calls/Puts - Net Premium Paid	Unlimited
Risk Profile	Max Loss Occurs When Price of Underlying = Strike Price of Calls/Puts	Unlimited
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Premium received - Put Strike Price

STRAP Vs RISK REVERSAL - When & How to use ?

	STRAP	RISK REVERSAL
Market View	Neutral	Bullish
When to use?	This strategy is used when the investor is bullish on the stock and expects volatility in the near future.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Buy 2 ATM Call Option, Buy 1 ATM Put Option	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Strike Price of Calls/Puts + (Net Premium Paid/2)	Premium received - Put Strike Price

STRAP Vs RISK REVERSAL - Risk & Reward

	STRAP	RISK REVERSAL
Maximum Profit Scenario	UNLIMITED	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Net Premium Paid	You have nearly unlimited downside risk as well because you are short the put
Risk	Limited	Unlimited
Reward	Unlimited	Unlimited

STRAP Vs RISK REVERSAL - Strategy Pros & Cons

	STRAP	RISK REVERSAL
Similar Strategies	Strip, Short Put Ladder, Short Call Ladder	-
Disadvantage	• To generate profit, there should be significant change in share price. • Expensive strategy.	Unlimited Risk.
Advantages	• Limited loss. • If share prices are moving then traders can book unlimited profit. • A trader can still book profit if the underlying falls substantially.	Unlimited profit.