Long
Strap
Buying two calls and one put at the same strike — a long-volatility trade with a bullish tilt whose V-shaped payoff rises about twice as fast on the upside as the down.
What is a strap?
A strap buys two calls and one put, all at the same strike and expiry. It is a long-volatility trade — like a long straddle — that wants a big move, but the extra call gives it a deliberate bullish bias. Up moves are rewarded roughly twice as fast as down moves of the same size, because two calls gain on a rally versus one put on a fall.
You pay three premiums up front, so a strap costs more than a straddle. In return you get a payoff that still profits on a sharp drop, but really comes alive on a strong rise. It suits a trader who expects volatility and leans bullish but wants protection if the move goes the other way.
Key takeaways
- A strap is a long-volatility trade with a bullish tilt — it profits from a big move, more so on a rise.
- It buys two calls and one put at the same strike, so the upside gains about twice as fast.
- Risk is defined and limited to the total premium paid for all three legs.
- It has two breakevens, with the upper one closer than the lower because of the extra call.
- Its enemies are time decay and falling IV; a flat market bleeds all three legs.
How a strap works
You construct it by buying 2 calls and 1 put at the same strike and expiry, usually at the money. As a net buyer of options there is no short obligation, so there is no SPAN or exposure margin — you simply pay the combined premium of all three legs. NIFTY and Bank Nifty options are cash-settled, so winning legs are paid out in cash at expiry.
The position is long vega and long gamma with a positive net delta from the second call — so it rises in value as the underlying climbs and benefits from a volatility spike. The cost is theta: three long legs decay faster than a straddle's two, so the market must move before time eats the premium. Traders use a strap when they expect a sharp move and believe the upside is the more likely path.
The numbers that matter
Worked NIFTY example
Suppose NIFTY is near 22,500 and you expect a sharp move with the upside more likely. You buy two 22,500 calls at ₹150 each and one 22,500 put at ₹140, a combined ₹440. With a lot size of 75, the trade costs ₹440 × 75 = ₹33,000 (illustrative figures):
- Upper breakeven: 22,500 + (440 ÷ 2) = 22,720 — closer, thanks to the extra call.
- Lower breakeven: 22,500 − 440 = 22,060.
- Max loss: ₹33,000 if NIFTY expires exactly at 22,500.
| NIFTY at expiry | Outcome | P&L (1 lot) |
|---|---|---|
| 21,500 | Put ITM (one leg) | +₹42,000 |
| 22,060 (lower BE) | Put offsets premium | ≈ ₹0 |
| 22,500 (strike) | All three expire worthless | −₹33,000 |
| 22,720 (upper BE) | Two calls offset premium | ≈ ₹0 |
| 23,500 | Two calls deep ITM | +₹1,17,000 |
Notice the asymmetry of the V: a 1,000-point rise to 23,500 makes ₹1,17,000, while an equal fall to 21,500 makes ₹42,000 — the upside pays roughly twice as fast.
When to use a strap
- You expect a big move and lean bullish — confident of volatility, biased to the upside.
- Implied volatility is low, so the three legs are cheap and a vol spike would help.
- You want defined risk with a built-in hedge if the move goes against your bias.
- A known catalyst (results, policy) is due where you favour an upside reaction.
Risks to respect
- Triple theta: three long legs decay faster than a straddle's two, so a flat market hurts more.
- IV crush: a post-event drop in implied volatility drags all three legs lower.
- Higher cost: the extra call makes the premium — and the max loss — larger than a straddle.
- Wrong-way move: a sharp fall still profits, but at half the rate of an equal rise.
Strap vs straddle
A long straddle buys one call and one put for a balanced, direction-neutral volatility bet. The strap adds a second call, tilting the payoff bullish: the upper breakeven moves closer and the upside gains roughly twice as fast, at the cost of a higher premium. Choose a straddle if you truly have no directional view; choose a strap when you expect volatility but lean to the upside.
Strap vs strip
The strap and the strip are bias-flipped twins. A strap buys two calls and one put for a bullish tilt; a strip buys two puts and one call for a bearish tilt. Both are long-volatility, defined-risk trades that want a big move — the only difference is which direction they reward more. Pair the choice to your directional lean.
Why is it called a “strap”?
“Strap” and “strip” are classic options-floor names for the lop-sided cousins of the straddle. The strap “straps on” an extra call to skew the trade bullish; the strip adds an extra put for a bearish skew. The labels long predate today's screen trading and have stuck as shorthand for these biased volatility plays.
Frequently asked questions
Is a strap bullish or bearish?
It is a long-volatility trade with a bullish bias. It profits from a big move either way, but holding two calls to one put means the upside pays out about twice as fast as the downside.
What is the maximum loss on a strap?
The total premium paid for the two calls and one put, suffered if the underlying expires exactly at the common strike so all three legs expire worthless.
How is a strap different from a straddle?
A straddle buys one call and one put for a balanced bet. A strap adds a second call, tilting the payoff bullish so it gains roughly twice as fast on a rise as on an equal fall.
Do I need margin to buy a strap in India?
No. All three legs are bought, so you only pay the combined premium. There is no SPAN or exposure margin because you carry no short obligation.
The bottom line
The strap is the bullish-leaning member of the long-volatility family: buy two calls and a put at one strike, accept a heavier premium and triple theta, and get a V-shaped payoff that rewards a rise about twice as fast as a fall. It still profits if you are wrong on direction, which makes it a hedged way to express a volatile-but-bullish view. When you expect a real move and lean upside, the strap turns that conviction into a defined-risk trade.
Test a strap before you risk capital
Build the trade on TradePulse's strategy builder and watch both breakevens, cost, payoff and Greeks update live on real NSE data.
Related strategies & terms
- Strip — the bearish-tilt twin, two puts and one call.
- Long Straddle — the balanced, direction-neutral parent trade.
- Long Strangle — a cheaper long-volatility bet with spread strikes.
- Delta · Implied Volatility · Breakeven