What is a split strike conversion strategy?

A split strike conversion strategy is an options trading technique that involves buying a stock, purchasing put options on that stock, and selling call options on the same stock. This strategy aims to protect against downward price movements while also generating income through premiums received from the call options. It is typically used in a moderately bullish market, allowing the investor to benefit from stock appreciation while limiting downside risk. The strategy is often employed by investors seeking to hedge their positions and enhance returns.