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Derivatives

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  • February 10, 2022
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Short Guts

A low volatility option strategy that involves selling in-the-money calls and in-the-money puts. This will result in a larger level of net credit. However, the risk associated with short guts is uncapped on either directions. Because of the short options, the position makes time decay work for the investor.

This strategy represents a bet on low volatility.


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