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Strategy View
Investor thinks that the market will be very volatile in the short-term
(this is similar to the buy straddle but the premium paid here is less.)
Strategy Implementation
Put option is bought with a strike a
and a call option is bought with a strike b.
Upside Potential
Unlimited - should the market fall or rise greatly.
Downside Risk
Limited to the two premiums paid. (If the investor would like to reduce
the premiums paid still further, a short butterfly might be interesting).
Margin
Not required.
Comment
Position loses value with passage of time as time value decreases on options.
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