5.3.1.1  Combinations 

A combination is similar to a straddle, in that an investor purchases or sells both a call and a put on the same stock; however, those options will have different strike prices and/or different expiration dates. For example, a position that includes each of the following options would be a combination:

Long 10 ABC May 40 calls @ 5
Long 10 ABC May 35 puts @ 4

The following would also be a combination:

Short 5 XYZ June 30 calls @ 3
Short 5 XYZ August 30 put @ 5

An investor would enter into a combination for the same reasons they would enter into a straddle. With a long combination, the investor hopes to profit by a significant change in the underlying security’s price, while for a short straddle, the invest