Snapshot
Legs
Buy 1 Low Call + Sell 1 High Call + Buy 1 High Put + Sell 1 Low Put
Outlook
Neutral / Arbitrage
Max profit
Strike price distance minus net debit paid
Max Loss
Net debit paid minus strike price distance
A long box spread option strategy combines a bull call spread with a bear put spread using the exact same two strike prices and expiration dates. This creates a completely delta-neutral position that has no market risk. Traders use this as a financing or arbitrage strategy when the box spread can be purchased for less than its guaranteed expiration value.
The payout at expiration is fixed and equal to the distance between the two strike prices, regardless of where the stock price closes. Your maximum profit is the distance between the strikes minus the net debit paid to enter. Maximum loss occurs if the entry debit exceeds the strike distance.
Example
Stock
$100
Trade
- Buy $95 Call for $6.50
- Sell $105 Call for $1.50
- Buy $105 Put for $6.00
- Sell $95 Put for $1.50
→ $9.50 debit ($950)
Expiry value
Fixed $10.00 ($1,000)
Outcomes
- Any stock price at expiration: +$50 Fixed Profit
- Expiration value locked at $1,000 vs $950 debit
- Stock at $80, $100, or $120: Same +$50 Result