Usage: You are Neutral, i.e.., you expect TXN to remain where it is. Implied Volatility should be high, you want to receive a high premium to sell a call and sell a put but at different strike prices. You feel future volatility will be lower, large premiums will offset market movements and time value decay will be in your favor. If you are wrong, you have less risk than with a short straddle.

Profits: Maximum profit occurs and all premium is retained ($470) when the price at expiration is between 95 and 125. Break-even can occur in either a up or down market change past either 130 or 90.

Losses: Losses are open ended and occur if TXN moves away from 130 or 90 in either direction at expiration.

Result: TXN closes at 110 13/16 on 01/21/00. At expiration, the trade has a maximum profit of $470.