An Axe is an option strategy that is designed to profit from a steady downtrend in the price of the underlying stock. This strategy involves buying put options at a certain strike price and selling call options at a level that is lower than the strike price. The combination of both options creates a synthetic long position in the underlying stock.Trading an axe involves selling one call option and buying two put options at a different strike price. The idea behind this strategy is that the stock price will move in a steady downward trend, thereby allowing the trader to profit from the puts and the calls.This strategy is a variation of the iron condor. However, unlike an iron condor, the trader does not need to estimate the implied volatility of the options involved. Instead, he can simply sell two at-the-money calls and buy two out-of-the-money put options with a higher strike price.
