When Should You Use This Strategy?

Implied vol very high; can afford premiums

Who Benefits Most?

High-conviction volatility traders

Position Setup

The Long Guts consists of the following legs:

  • Buy 190 strike call at $12 premium
  • Buy 1110 strike put at $12 premium

How Profit and Loss Work

Maximum Profit: Unlimited: |Stock − strike| − Premium

Maximum Loss: Limited: Width between strikes − Premium

Break-even Points: Lower call − Premium; Upper put + Premium

Timing & Time Horizon

30–60 days

Most traders enter this strategy 30–60 days before their expected move, allowing enough time for the position to develop while avoiding excessive time decay on shorter-dated options.

Capital Requirements

Very high: ITM options expensive

How to Manage the Position

Close at 50% profit

  • Monitor the position daily, especially as it approaches profitability
  • Set clear profit targets and exit rules before entering
  • Consider closing early to lock in gains rather than waiting for max profit
  • Be prepared to cut losses if the thesis is wrong

Key Risks & What to Watch

  • Very expensive
  • Needs huge move

Model Before You Trade

Every strategy performs differently based on entry price, strike selection, and premium levels. Use the interactive Long Guts calculator to model the payoff with your expected entry, strikes, and premiums before committing capital.

Educational information only. This guide explains how the strategy works mathematically and typically behaves. It is not investment advice, and past performance does not guarantee future results. Options trading involves significant risk, including the potential loss of premium paid. Paper trade or use small positions while learning.