Trading Strategies
What is Strangle?
Buying a call and put at different strike prices to profit from large moves.
📖 Complete Definition
A long strangle involves buying an OTM call and OTM put with the same expiration. Like a straddle, it profits from large moves in either direction but is cheaper because both options are out-of-the-money. The tradeoff is needing a larger move to profit. Short strangles (selling both) are popular income strategies.
💡 Examples
- →Buy $105 call and $95 put (stock at $100) for combined $3 premium
- →Stock must move above $108 or below $92 to profit at expiration
❓ Frequently Asked Questions
Straddle vs strangle - which is better?
Strangles are cheaper but need larger moves to profit. Straddles cost more but have lower breakevens. Choose based on your volatility expectations and budget.
🔗 Related Terms
Put Your Knowledge to Practice
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