Notices

Short strangle

From Traderpedia

Definition:
Selling an option strangle position.


A short strangle is the simultaneous sale of an out-of-the-money call and an out-of-the-money put of the same expiry.

This strategy benefits from a lack of movement in the underlying and/or a drop in implied volatility. The maximum gain on the position is the premium taken in and is realized if the underlying settles in between the two strikes. The maximum loss of the position is unlimited.