Guts

A guts strategy is an advanced two-leg volatility play that uses in-the-money options to create higher probability profit scenarios while requiring larger price movements to achieve profitability, making it suitable for traders with strong conviction about significant market moves. This sophisticated strategy involves buying both an in-the-money call and an in-the-money put, creating a position that has higher intrinsic value but requires more substantial price movement to overcome the higher premium costs. The strategy is particularly effective when traders expect major market events or structural changes that could drive significant price volatility beyond normal ranges. Professional traders use guts when they want higher probability of profit compared to traditional straddles but are willing to accept the requirement for larger moves and higher capital investment. The in-the-money structure provides better delta characteristics and reduced time decay sensitivity compared to at-the-money straddles, making it suitable for longer-term volatility plays. The strategy offers more predictable behavior but requires sophisticated understanding of intrinsic versus time value dynamics

If NIFTY is at ₹25,800, set up: Buy ₹25,600 Call for ₹280, Buy ₹26,000 Put for ₹270, creating ₹550 total investment with breakeven points at ₹25,050 and ₹26,550, requiring moves beyond these levels for profitability.