Strap

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DEFINITION of 'Strap'

An options strategy created by being long in one put and two call options, all with the exact same strike price, maturity and underlying asset. Also referred to as a "triple option".

INVESTOPEDIA EXPLAINS 'Strap'

A strap option is used when a trader believes that the future price movement of the underlying security will be large and more likely up than down. By adding two call options the trader has a large gain if he or she is right about the large upward movement. But if the forecast is wrong and the price has a large reversal, the trader is protected by the put option.

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  2. How can an investor profit from the cyclical nature of the electronics sector?

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  3. What does negative vega mean for credit spreads?

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  5. What options strategies are best suited for investing in the drugs sector?

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  6. What's the difference between a credit spread and a debt spread?

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