What is the structure of a Strip options strategy?

The structure of a Strip options strategy involves the use of two puts and one call. This strategy is designed to capitalize on significant price movements in either direction, with a particular emphasis on downward movements, which is why it includes more puts than calls.

By owning two puts, the trader positions themselves to benefit from sharp declines in the underlying asset's price, while the single call provides some exposure if there is a significant upward price movement. This asymmetric structure indicates a bearish outlook with a potential for profit should the asset price rise unexpectedly. The combination effectively creates a higher leverage on the downside, suitable for traders expecting volatility.

Other combinations, such as a put with two calls or other variations listed in the alternatives, do not align with the mechanics of the Strip strategy, which is fundamentally designed for a specific directional bias on the downside with an opportunity for upside profit, thus making it distinct from those alternatives.