Search a symbol to visualize the potential profit and loss for a guts option strategy.
What is a guts?
DirectionalUnlimited ProfitLimited Loss
Similar to a strangle (max profit, max risk, and chance of profit is the same), but more expensive because the put and call positions are reversed. Outside of very specific circumstances, there is no reason to trade a guts over a strangle. (A strangle will also have more liquid options, as they are out-of-the money while guts uses in-the-money options)
- Buy a call at strike A
- Buy a put at strike B