advancedMedium RiskVolatile
Strangle
Buy an OTM call and OTM put. Cheaper than a straddle — needs a bigger move to profit.
What is a Strangle?
A strangle buys an OTM call and OTM put at different strikes. It's cheaper than a straddle (OTM options cost less) but requires a larger stock move to profit. The stock needs to break out of a range defined by the two strikes plus premium paid.
When to use it
Use when expecting a very large move and want to reduce premium cost vs. a straddle. Also used short-side: sell a strangle to collect premium if you expect the stock to stay range-bound.
Structure
Buy 1 OTM call (above ATM) + buy 1 OTM put (below ATM), same expiration.
Key Metrics
Max Profit
Unlimited to the upside; large to the downside (stock can go to zero).
Max Loss
Total premium paid (if stock stays between the two strikes).
Breakeven
Short call strike + premium (upper) and long put strike − premium (lower).
Greeks Profile
Delta: near zero. Gamma: high. Theta: strongly negative. Vega: positive.
Tips & Best Practices
- 1Short strangles collect premium — the inverse of this trade.
- 2A strangle is cheaper than a straddle but needs a 20–30% larger move.
- 3Roll profitable side to lock in gains after a big move.
- 4Earnings strangles bought 1–2 weeks before the event can benefit from IV rise before the report.
See it in action
Model a Strangle with a real ticker. See the P&L chart, heatmap, and exact breakevens.
Open Strangle Calculator →