The 4S of Option Trading Strategies: Straddle, Strangle, Strap, Strip

Abstract

The four option trading strategies mentioned in this handout are extremely useful for investors and students of finance. However, these option trading strategies are not popular in Bangladesh since the option market in this country is absent. But it is expected that the option market will be available soon. Particularly, put option and call option markets will be introduced in near future. The bond market in Bangladesh needs to be extended to include the put and call options for its efficiency and overall development of the capital market. Based on put option and call option of bonds, this handout presents option trading strategies known as 4S in brief. The 4S stands for (1) Straddle, (2) Strap, (3) Strip, and (4) Strangle.