CBOE | Chicago Board Options Exchange Optionetics - Your Investment Education and Options Trading Resource Option Strangle (Long Strangle) Explained | Online Option Trading Guide Home > Option Strategy Finder > Neutral Trading Strategies The long strangle, also known as buy strangle or simply "strangle", is a neutral strategy in options trading that involve the simultaneous buying of a slightly out-of-the-money put and a slightly out-of-the-money call of the same underlying stock and expiration date. The long options strangle is an unlimited profit, limited risk strategy that is taken when the options trader thinks that the underlying stock will experience significant volatility in the near term. Long strangles are debit spreads as a net debit is taken to enter the trade. Unlimited Profit Potential Large gains for the long strangle option strategy is attainable when the underlying stock price makes a very strong move either upwards or downwards at expiration. The formula for calculating profit is given below: Limited Risk The formula for calculating maximum loss is given below: Breakeven Point(s) There are 2 break-even points for the long strangle position. Example
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