A written straddle is appropriate if no signicant movement is expected in the stock price, as it would
lead to prots.
13.4.2 Strips
Straddles are used when the probability of an increase in price is similar to the probability of a decrease
in the price. Strips are used when the probability of an increase in price is smaller than the probability of
a decrease in the price. Since an investor would be interested in buying a call if they expect the stock price
to increase and since they would be interested in buying a put if they expect the stock price to decrease, a
strip strategy implies that the ...
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