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Strategy View
Investor thinks that the market will not be volatile, but wants to cap
the downside risk.
Strategy Implementation
Call option with low strike b bought and
2 call options with medium strike a
sold and call option with high strike c
bought. (The same position can be created with puts, but is less common).
Upside Potential
Limited - to the difference between the lower and middle strikes minus
the net debit of establishing the spread.
Downside Risk
Limited to the initial net debit of establishing the spread.
Margin
Margin should be possible.
Comment
Can be difficult to execute such strategies quickly.
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