Long Combo

A long combo is an advanced volatility strategy that creates straddle-like exposure using out-of-the-money options at different strike prices, providing a more cost-effective approach to volatility trading while requiring larger price movements for profitability. This sophisticated two-leg strategy involves buying both an out-of-the-money call and an out-of-the-money put, creating a position that profits from significant price movement in either direction while offering reduced premium costs compared to traditional straddles or strangles. The strategy is particularly effective when traders expect major market events, earnings announcements, or technical breakouts that could drive substantial price volatility beyond normal trading ranges. Professional volatility traders use long combos when they want exposure to large price movements but prefer to reduce the initial capital investment required for traditional volatility strategies, making it suitable for high-conviction volatility plays with limited capital allocation. The wider strike separation creates a larger dead zone where the strategy loses money, but the reduced premium cost can provide better risk-adjusted returns when significant moves occur. Risk management involves careful strike selection to balance premium costs with breakeven requirements while monitoring time decay as expiration approaches

If NIFTY is at ₹25,800, set up: Buy ₹26,200 Call for ₹70, Buy ₹25,400 Put for ₹40, creating total investment of ₹110 with profit potential above ₹26,310 or below ₹25,290, requiring moves beyond these breakeven points but offering substantial leverage for large directional moves.