Short Strangle Strategy
Learn to profit from range-bound markets by selling out-of-the-money puts and calls. The short strangle offers high probability of profit with premium from both sides.
What is Short Strangle Strategy?
Short Strangle Strategy is a neutral options strategy where you sell an out-of-the-money put and an out-of-the-money call with the same expiration. You collect premium from both sides and profit if the stock stays within your short strikes.
Short strangles offer higher probability of profit than iron condors (no protection cost) but have undefined risk on both sides. Best for experienced traders with proper risk management.
TL;DR - Quick Summary
Short Strangle = Sell OTM put + Sell OTM call. Collect premium from both sides. Profit if stock stays between your strikes. Higher win rate (75-85%) than defined-risk strategies but UNLIMITED RISK on both sides. Requires margin and active management. Best in high IV on liquid underlyings.
What is a Short Strangle?
A short strangle involves selling an out-of-the-money put and an out-of-the-money call with the same expiration. You collect premium from both sides and profit when the stock stays within your short strikes.
Key Characteristics
- Win Rate: 75-85% with proper strike selection
- Max Profit: Premium collected from both sides
- Max Loss: UNLIMITED on both sides
- Best For: High IV environments, range-bound markets
Risk Warning
Short strangles have undefined risk. A large move in either direction can result in losses many times greater than the premium collected. Only trade with proper position sizing and be prepared to manage or close losing positions quickly.
Related Options Strategies
Iron Condor
Similar setup with defined risk using long options for protection.
Short Straddle
ATM version with higher premium but tighter profit zone.
Understanding related strategies helps you choose the best approach for your market outlook and risk tolerance. Each strategy has unique characteristics that make it suitable for different market conditions.
Your Learning Path
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