The Long Put Christmas Tree Spread is a strategy similar in structure to its call counterpart but designed for a different market outlook.
It typically involves three strike prices and is structured to profit from a moderate downward movement in the underlying asset’s price.
Here’s the structure of a traditional Long Put Christmas Tree Spread:
So, Let’s take a real example –
This is a long put Christmas Tree spread.
The payoff graph looks like –
This is something one can do when you have too much OTM PE sell and fear that the market can flash crack! It gives sharp profit that time for a while