A three-strike strategy using calls. You buy one lower call, sell two middle calls, and buy one higher call. Maximum profit occurs if the stock is exactly at the middle strike at expiration. Like a pinpoint bet on where the stock will be.
Middle strike - Lower strike - Net premium paid
Net premium paid
Lower strike + Net premium AND Upper strike - Net premium
Long 1 lower Call + Short 2 middle Calls + Long 1 higher Call
Limited profit at middle strike. Very limited risk (net debit). Best when IV is high.
When you expect the stock to stay near a specific price. When implied volatility is high (cheaper to buy). Low-cost, defined risk play for pinpoint price targets.