Long Strangle Calculator
neutralA long strangle is like a straddle but with OTM strikes: buy an OTM call and an OTM put. It's cheaper than a straddle but requires a bigger move to profit.
Max Profit
Unlimited (upside) / Put strike − Total premium (downside)
Max Loss
Total premium paid (both legs) × 100
Break Even
Call strike + Total premium / Put strike − Total premium
When to Use a Long Strangle
- You expect a big move but don't know the direction
- You want a cheaper alternative to a straddle
- Before a major catalyst where a large move is expected
- You're willing to accept wider breakevens for lower cost
Risks
- The stock must move more than a straddle to break even
- Both legs can expire worthless if the stock stays in the range
- Time decay and IV crush are significant risks
How a Long Strangle Works
Buy an OTM call and an OTM put with the same expiration. Cheaper than a straddle, but breakevens are wider.
Example
AAPL at $195. Buy the $200 call for $2.60 and the $190 put for $2.20. Total cost: $4.80 ($480).
Key Takeaway
Strangles are cheaper straddles. The tradeoff: the stock needs to move further to profit. Best used when you're confident a big move is coming but unsure of direction.