Risk Reversal

Description

Selling an OTM Put and buying an OTM Call.

Trading Logic

Synthetic long strategy used for hedging or low-cost bullish bets.

Practical Example

Stock at $100. Sell $90P, buy $110C.

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P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss