Strangle
A strangle is an options strategy involving the purchase (or sale) of a call and put option with different strike prices but the same expiration. It's cheaper than a straddle but requires a bigger price move to profit.
Understanding the Concept
• Long strangle: buy out-of-the-money call + out-of-the-money put • Costs less than a straddle because both options start out of the money • Requires larger price movement to become profitable • Short strangles collect premium but have wider profit zones than straddles
Real-World Example
With stock XYZ at $100, a trader buys a $105 call for $3 and a $95 put for $2.50, paying $5.50 total. They profit if the stock goes above $110.50 or below $89.50 by expiration. The wider break-even range means they need a bigger move than a straddle would require.
How Strykr Helps
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