Strategy Overview
Medium RiskExpertBullishBearish
ZEBRA (Zero Extrinsic Back Ratio) buys 2 ATM options and sells 1 ITM option. The result is a synthetic stock position with defined risk and nearly zero extrinsic value.
Max Profit
Unlimited (similar to stock)
Max Loss
Net debit paid
Breakeven
Depends on strikes and net debit
Probability
~50% win rate
hist. est.
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Example Setup Calculator
$
Debit Paid
$400
Max Profit
$500
Max Loss
$400
Breakeven
$104.00
Strategy Components
SELL ITM CALL
Sell 1 ITM option
BUY ATM CALL
Buy 2 ATM options
When to Use
- You want stock-like exposure with defined risk
- You want to avoid time decay (zero extrinsic)
- You prefer options over owning shares
- You want leveraged directional exposure
Best Market Conditions
- Strong directional conviction
- Want stock replacement
- Prefer defined risk to stock ownership
Best Practices
- Choose strikes to minimize extrinsic value
- Use longer-dated options for more time
- Monitor delta to ensure stock-like behavior
- Works best with liquid options