A strip option is a bearish volatility options strategy that involves buying two put options and one call option on the same underlying asset, at the same strike price (typically at-the-money), with the same expiry date. The strategy profits from significant price movement in either direction — but with a bearish bias, since the double put position means the strategy generates higher profit when the underlying falls sharply than when it rises equally. The maximum loss is limited to the total net premium paid for all three options, which is higher than a standard straddle (one call plus one put) due to the additional put purchase. The strip is one of a pair with the strap (which uses two calls and one put, creating a bullish volatility bias). Both strips and straps are useful when a trader expects significant volatility but has a directional preference — the strip is appropriate when a large downside move is considered more likely than an equally large upside move. In Indian F&O markets, strip strategies on Nifty 50 and Bank Nifty options are used around events where a negative outcome is considered more probable than a positive one — such as a hawkish RBI policy surprise, a disappointing GDP data release, or a weak global macro backdrop during an options expiry cycle.
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