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The Strip is a Non-Directional Options Strategy with a Bearish bias. It is similar to a Straddle, except two At The Money Puts are purchased as well as one At The Money Call (where a Straddle has an even number of Calls and Puts).

The Strip is profitable when there is a strong movement in the price of the Underlying asset or commodity, especially to the downside. It has a defined risk limited to the debit paid to purchase the three Options (2 x Put and 1 x Call).

Strips benefit from an increase in Volatility and they have many of the same characteristics of a Straddle.

The inverse strategy to a strip is the Strap, which is based on the same principle, except it has a Bullish bias via the use of two Long calls rather than puts.
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Contributed by: Ralph Windsor

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