It stands for limited-risk options, i.e., positions which are taken in complex options that virtually impose no risk or a limited deal of risk such as long option, long straddle, long strangle, long ratio spread, butterfly, long wrangle, and synthetics.

Typically, these positions are risk neutral or a very limited deal of risk. In a neutral position, the holder’s exposure remains almost static irrespective of market movement (changes in the underlying price).