A combination of several options can have some desirable properties not present in a single option instrument.
E.g., when working with only a single option instrument, you have to guess correctly the magnitude and the direction of the future price movements, however with certain option combinations you can make profit regardless of either the direction or the magnitude of the price movement. Option combinations, or option strategies, are quite popular among option traders. As an example, this study shows a long straddle, which will be explained in details in a latter study.
Want to learn more? Download now an interactive reference application for iPhone.
The screenshot shows the following portfolio:
European call struck at 11.000 with expiry in 30 days
European put struck at 11.000 with expiry in 30 days
This is an excerpt from iOptioneer option trading reference application. In order to build the real-time dynamic strategy graph and run simulations you will need to download the application from App Store.