Definition

The “Combo Spread” received its name because it is really two spreads in one. It is a risk reversal that has been cleaned up a little to reduce the risk. In short it is an unbalanced condor and a long vertical spread combined.

COMBO SPREAD (Purchased)* = Unbalanced Put Spread + Long Call Spread

* A combo spread can be set up to be bullish, as with the formula just stated, or it can be reversed to be a bearish position (unbalanced call spread + long put spread).