Selling both a call and a put at the same strike. Maximum profit if the stock expires exactly at the strike price. You collect double premium but face risk in both directions. One of the highest-risk strategies.
Total premium received from both options
Unlimited on upside, substantial on downside
Strike ± Total premium received
Short 1 ATM Call + Short 1 ATM Put (same strike, same expiry)
Limited profit (total premium). Unlimited risk to upside, substantial to downside.
When you expect very low volatility and the stock to remain near current price. When IV is extremely high. Requires significant margin and active management.