A Box Spread, or long box, is an options arbitrage strategy that combines buying a bull call spread with a matching bear put spread. A box spread can be thought of as two vertical spreads that each has the same strike prices and expiration dates. The goal of this strategy is to profit from the time decay of options premiums.The first step in creating a long box is to identify an underlying security that has options with high implied volatility and low premiums. Next, you will want to buy a call option at one strike price and sell a call option at a higher strike price. You will also want to buy a put option at one strike price and sell another put option at lower strike price. This creates your bull call spread and bear put spread respectively. Finally, you will want to wait for the options premium on both spreads to decay before closing out the position for profits.
