Short Guts Option strategy involves selling in-the-money Call and Put options at the same time for the same security and expiry date, where the strike prices of both the options are at equidistance from the underlying price. A trader opts for this strategy when he expects less volatility. It’s a credit spread strategy, as the trader receives the premium on both the options at the start of the trade, which is limited profit but at the cost of a very high risk of losing money if the strategy fails as there are no caps on price movements.
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