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Buying or selling an out-of-the-money put option and call option on the same underlying instrument, with the same expiration. Profits are made only if there is a drastic change in the underlying instrument's price.

Strangle Strategy

An option strategy in which one buys two out-of-the-money options (usually one call and one put) on the same asset at different strike prices. One profits from a strangle position when there is a large price movement on the underlying asset, regardless of the direction. This is because one of the options will become in the money, so long as the price moves in one direction or the other. Loss only occurs if the price of the underlying asset remains largely the same.


A strangle is a hedging strategy in which you buy or sell a put and a call option on the same underlying instrument with the same expiration date but at different strike prices that are equally out-of-the-money.

That is, the strike price for a put is above the current market price of the stock, stock index, or other product, and the strike price for a call is below the market price.

If you buy a strangle, you hope for a large price move in one direction or another that would allow you to sell one of the contracts at a significant profit. If you sell a strangle, you hope there's no significant price move in either direction so that the contracts expire out-of-the-money and you keep the premium you received.

References in periodicals archive ?
It should be noted the apparent symptoms of strangles were not identified until 14 days after the horse arrived back at Newmarket.
I took a rug to be cleaned which Herbie hadn't worn since winter but I got a phone call to collect it when the lady realised he had strangles.
BHS has also launched a campaign with Animal Health Trust to raise pounds 250,000 for further research into strangles.
There is also the potential problem of apparently healthy horses harbouring the disease with some remaining so-called carriers or shedders more than a year after an infection of strangles.
The suspected case is at Rhyd Ifan livery yard, Glan Conwy, and follows outbreaks of strangles in the Conwy valley earlier this year.
The AHT's work to develop and test a fully effective vaccine against strangles is ongoing.
An outbreak of strangles is rare within racing, but there was a case in the Lambourn area in 2000 in a horse imported from Ireland by Charles Egerton.
Having identified 60 regions where differences exist, they hope to learn how the strangles pathogen became, in Waller's words, "the black sheep of the family".
The Option Investor Newsletter is proud of their outstanding performance in every one of these categories; Covered-Calls, Naked-Puts, Bull & Bear Spreads, Straddles, Strangles and Volatility Positions.
One interesting trading strategy that we haven't covered in a while is the short strangle.
This column will examine potential straddle and strangle positions, the pros and cons of putting on a straddle or strangle, and the profit and loss potential of this position.