Risk Graphs: Long Combo

-11-8-2009 3-54-31 PM.pngLongCombo

-The Long Combo, sometimes known as a Risk Reversal, is comprised of a lower strike Short Put and a higher strike Long Call.  The credit from the Short Put helps to pay for the debit of the Long Call.  As a result, the position can have very little if any debit.  The strategy simulates very closely the risk profile of Long Stock by for much less money.  It is a bullish position.  Study the risk graph and you should gain understanding of the risk and reward of the position.  Robin

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