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Related to Strangle: strangle strategy


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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Around 10% of strangles victims can continue to carry the bacteria whilst appearing outwardly healthy.
"The ERA can confirm that there has not been a case of strangles in the UAE Thoroughbred racing population for more than 10 years and there were no signs suggestive of strangles at any time in horses participating in the Dubai International Racing Carnival," the ERA statement said.
Strangles is an infectious malady of equidae characterized by upper respiratory tract infection, dyspnoea, anorexia, regional suppurative lymphadenitis and causes high morbidity and low mortality.
"Having done so, it turned out not to be strangles, which was a huge relief all round." He added: "I wasn't going to have too many runners anyway, so it wasn't a big issue just to leave him alone for a couple of days and get the horse tested.
Peter Webbon, the AHT's chief executive, said: "Strangles must be beaten.
Strangles can also be spread through contamination of food or water, or from the hands and clothing of stable staff.
"Everyone wants to know if your horse has strangles, but no one wants to know you when it has.
Caused by the bacterium Streptococcus equi, strangles has many unpleasant effects including abscessed lymph nodes of the head and neck, which can in severe cases restrict the airway, leading to the name 'strangles'.
Plas Uchaf owner David Rae stressed his yard was free of strangles but he said the club's decision to cancel was the "responsible way forward".
Strangles attacks a horse's larynx, leading to swollen glands that can restrict airways.
The AHT's head of epidemiology, Richard Newton, added that strangles is the most commonly reported horse disease in the world, and unlike many contagious illnesses, is present on every continent.
This data can then be used to assess the impact strangles has on the equestrian industry and promote the aims of the new code.