What is an option combination?

An option combination refers to a strategy that involves both calls and puts that differ either in their strike prices or their expiration dates. This approach allows investors to create a variety of potential outcomes and profit opportunities based on the market's movements.

In a combination strategy, such as a straddle or strangle, the differing strikes or expirations can help capitalize on expected volatility in the underlying asset without necessarily having to predict the direction of the movement. This flexibility is essential for managing risk and allowing for various market scenarios.

The other options suggest specific configurations that do not encompass the broader definition of a combination. For instance, just having a call and a put with the same strike price represents a specific strategy called a straddle, rather than a general combination. A strategy involving multiple calls alone does not involve the broader array of options that a combination does. Lastly, a collection of options from different sectors isn't a recognized term in options trading and doesn’t pertain to the characteristics of combining options in trading strategies.