---
description: "A bullish capital-gain strategy (long risk reversal) buying an OTM call at K1 and selling an OTM put at K2 < K1, profiting from a strong upward move."
tags: [options, speculation, bullish, risk-reversal]
---

# Long Combo

**Section**: 2.12 | **Asset Class**: Options | **Type**: Speculation

## Overview
The long combo (a.k.a. "long risk reversal") amounts to buying an OTM call option with strike K1 and selling an OTM put option with strike K2, where K1 > K2. The trader's outlook is bullish. This is a capital gain strategy.

## Construction
- Buy 1 OTM call option at strike K1
- Sell 1 OTM put option at strike K2 (K2 < K1), same expiry

Net debit or credit H (H = D if net debit, H = -C if net credit; K1 > K2)

## Payoff Profile
f_T = (S_T - K1)+ - (K2 - S_T)+ - H

Breakeven depends on sign of H:
- S* = K1 + H  (if H > 0, net debit)
- S* = K2 + H  (if H < 0, net credit)
- K2 <= S* <= K1  (if H = 0, zero-cost)

- Max profit: P_max = unlimited
- Max loss: L_max = K2 + H

## Key Conditions / Signals
- Strongly bullish outlook
- Traders often structure as zero-cost (H = 0) by selecting K1 and K2 such that premiums offset
- Profits from a large upward move; loses if stock falls below K2

## Notes
Unlike the long synthetic forward (where K1 = K2 = S0), the long combo uses out-of-the-money strikes on both legs, creating a gap zone [K2, K1] where the payoff is flat (equal to -H). Downside is limited to K2 + H if S_T goes to zero.