Core Viewpoint - The article discusses the Strip and Strap strategies as options trading techniques that allow investors to profit from significant stock price movements, whether upward or downward, by adjusting the ratio of call and put options in their portfolios [2][10]. Summary by Sections Strip Strategy - The Strip strategy involves buying 1 at-the-money (ATM) call option and 2 put options with the same strike price and expiration date, resulting in a bearish bias where profits are maximized during significant downward movements [3][10]. - The total premium cost (maximum loss) is calculated as 2P + C, where P is the put option premium and C is the call option premium [5]. - The strategy's break-even points are defined as the strike price minus the total premium cost divided by 2 for the downside and the strike price plus the total premium cost for the upside [5]. Strap Strategy - The Strap strategy consists of buying 2 ATM call options and 1 put option, creating a bullish bias where profits are maximized during significant upward movements [10][12]. - The total premium cost (maximum loss) is calculated as P + 2C, where P is the put option premium and C is the call option premium [12]. - The break-even points for this strategy are the strike price minus the total premium cost for the downside and the strike price plus half of the total premium cost for the upside [12]. Performance Analysis - For the Strip strategy, if the stock price rises to $300, the profit can reach $1,305, yielding a profit ratio of 77%. Conversely, if the price drops to $250, the profit can increase to $2,305, yielding a profit ratio of 136% [8][9]. - For the Strap strategy, if the stock price rises to $300, the profit can reach $4,380, yielding a profit ratio of 270%. If the price drops to $250, the profit can be $380, yielding a profit ratio of 23% [14][15]. Strangle Strategies - The Strip Strangle strategy involves buying 1 out-of-the-money (OTM) call option and 2 OTM put options, maintaining a bearish bias with lower costs but requiring larger price movements to be profitable [17][19]. - The Strap Strangle strategy consists of buying 2 OTM call options and 1 OTM put option, maintaining a bullish bias with similar cost considerations [23][25]. - The total premium costs and break-even points for both strangle strategies are calculated similarly to the straddle strategies, with specific adjustments for OTM options [19][25]. Recommendations - The article suggests using short-term options to capitalize on rapid volatility increases, especially around significant events like earnings reports or Federal Reserve decisions [31]. - It emphasizes calculating break-even points to assess whether expected stock movements will meet profit requirements and advises on early exits to preserve time value if the strategy is not performing as expected [31].