Long Combo
Description
Buying an out-of-the-money call and selling an out-of-the-money put, a cheaper, more leveraged stand-in for a long stock position.
Setup
- Buy one out-of-the-money call.
- Sell one out-of-the-money put, same expiry.
Context
Used as a lower-cost, higher-leverage alternative to buying the underlying outright, when a rally is expected and the gap between the strikes is an acceptable dead zone.
Risk Profile
Above the call strike, gain grows without bound. Below the put strike, loss grows as the underlying falls, bounded only by zero. Between the strikes, the position is flat at its net cost.
Pros
- Much less capital required than owning the underlying.
- Unlimited upside participation.
- Can often be set up for a small credit or low cost.
Cons
- Uncapped downside risk below the put strike.
- Flat zone between the strikes means no gain from small moves.
- Assignment risk on the short put before expiry.
Effect of Time
Time decay has a modest net effect, since the two legs partially offset each other.
Effect of Volatility
A change in implied volatility has a limited net effect, since the call and put move in opposite ways that partially cancel out.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Long | Call | 1 | $85000.0000 | 24 Sep 2026 | $67.5021 | $75.9399 | $8.4378 |
| Short | Put | 1 | $84000.0000 | 24 Sep 2026 | $105.4721 | $92.8154 | $13.1840 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $83000.0000 | -$1000.0000 | -$962.0301 | -2533.7% |
| $83962.0301 breakeven | -$37.9699 | $0.0000 | +0.0% |
| $84000.0000 | $0.0000 | $37.9699 | +100.0% |
| $84377.2900 current | $0.0000 | $37.9699 | +100.0% |
| $85000.0000 | $0.0000 | $37.9699 | +100.0% |
| $86000.0000 | $1000.0000 | $1037.9699 | +2733.7% |