Combo strategy has two combinations that are bullish and bearish combo. bullish combo’s strategy is for a bullish market and a bearish combo strategy is for a bearish market. This strategy involves two steps that are buying out of the money option and selling in the money option. If the security price goes up more than the higher strike price, profit can be generated. But if the security price goes down lower than the lower strike price, the loss is incurred.
If the security price fluctuates within the higher and lower strike price, you won’t lose anything. This strategy can earn an unlimited profit but also will cause an unlimited loss depending on the market direction and also which strategy you have used.