A short gut strategy involves selling an In-The-Money (ITM) call option, and an In-The-Money put option of the same stock, at the same expiry date and in equal quantities. This option is a limited profit and an unlimited risk strategy. A short guts strategy is similar to the short strangle and the short straddle strategy. It has a wider range of profitability than the other two. However, it also has the lowest profits an investor can earn and it is the safest one out of the three. The short guts option works best when the investor expects there to be little volatility in the stock.
In this video we will be discussing:
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What Short Guts Options is
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How it works
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How it is calculated using Marketxls
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