Tim Olson
47471b7700
- Flink update_bars debouncing - update_bars subscription idempotency bugfix - Price decimal correction bugfix of previous commit - Add GLM-5.1 model tag alongside renamed GLM-5 - Use short Anthropic model IDs (sonnet/haiku/opus) instead of full version strings - Allow @tags anywhere in message content, not just at start - Return hasOtherContent flag instead of trimmed rest string - Only trigger greeting stream when tag has no other content - Update workspace knowledge base references to platform/workspace and platform/shapes - Hierarchical knowledge base catalog - 151 Trading Strategies knowledge base articles - Shapes knowledge base article - MutateShapes tool instead of workspace patch
1.5 KiB
description, tags
| description | tags | ||||
|---|---|---|---|---|---|
| A bearish capital-gain strategy (short risk reversal) buying an OTM put at K1 and selling an OTM call at K2 > K1, profiting from a strong downward move. |
|
Short Combo
Section: 2.13 | Asset Class: Options | Type: Speculation
Overview
The short combo (a.k.a. "short risk reversal") amounts to buying an OTM put option with strike K1 and selling an OTM call option with strike K2, where K2 > K1. The trader's outlook is bearish. This is a capital gain strategy.
Construction
- Buy 1 OTM put option at strike K1
- Sell 1 OTM call option at strike K2 (K2 > K1), same expiry
Net debit or credit H (H = D if net debit, H = -C if net credit; K2 > K1)
Payoff Profile
f_T = (K1 - S_T)+ - (S_T - K2)+ - H
Breakeven depends on sign of H:
-
S* = K1 - H (if H > 0, net debit)
-
S* = K2 - H (if H < 0, net credit)
-
K1 <= S* <= K2 (if H = 0, zero-cost)
-
Max profit: P_max = K1 - H (if stock goes to zero)
-
Max loss: L_max = unlimited (stock can rise without bound)
Key Conditions / Signals
- Strongly bearish outlook
- Traders often structure as zero-cost (H = 0) by selecting K1 and K2 such that premiums offset
- Profits from a large downward move; loses if stock rises above K2
Notes
The short combo creates a flat zone [K1, K2] where the payoff equals -H. Unlike the short synthetic forward (where K1 = K2 = S0), both strikes are OTM. Unlimited loss potential on the upside due to the short call.