Doomsday options strategy: Simultaneously buying calls and puts, with multiple price range examples.

Multi-price strategy for weekly options As mentioned earlier (click to view), we use a simplified example to illustrate how to simultaneously buy call and put options at different strike prices to construct a strategy similar to a straddle, but here we adopt a multi-price range approach.

Scenario assumptions:
- Assume stock XYZ is currently trading at $100.
- You anticipate significant price volatility in the coming month due to an upcoming earnings report, but you're uncertain about the direction.
- You decide to build a strategy with three price ranges, setting strike prices both above and below the current price.

Strategy construction:
1. Buy $95 strike put options: Assume $2 per contract.
2. Buy $100 strike call options: Assume $2 per contract.
3. Buy $105 strike put options: Assume $1 per contract.
4. Buy $110 strike call options: Assume $1 per contract.

Cost and potential returns:
- Total cost = $2 ($95 Put) + $2 ($100 Call) + $1 ($105 Put) + $1 ($110 Call) = $6 per contract.
- If the stock price at expiration:
  - Below $95: The $95 Put profits while others lose, but overall may still result in loss as the $95 Put's gains might not cover other options' costs.
  - Between $95-$100: All options may lose money as you need extreme price movement to profit.
  - Between $100-$105: The $100 Call starts profiting but the $95 Put loses, potentially still resulting in overall loss.
  - Between $105-$110: Both $100 Call and $105 Put profit, but need to consider whether gains exceed initial investment.
  - Above $110 or below $95: Two options would significantly profit, but if gains can't cover the other two options' costs plus initial investment, net loss may still occur.

** Note **: This strategy profits from significant price movement in either direction. However, if the price doesn't move much, all options may expire worthless, resulting in total loss of the initial premium paid.

Conclusion: This is an advanced and complex options trading strategy requiring accurate market volatility judgment and willingness to take high risks. Fully understand all risks before implementation, and consider using stop-loss or dynamic management strategies to control risks.

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Weekly options strategy