Short Strangle option strategy
Short Strangle is a range bound strategy that aims to make money from sideways market and falling volatility.
Payoff at expiry
Nifty, lot size 65 · Nifty future 25,151 · 17 Nov 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| SELL | OTM Call | 25,200 | 1 | 65 | ₹89.99 |
| SELL | OTM Put | 25,100 | 1 | 65 | ₹88.99 |
How it works
- Sell 1 OTM call at the 25,200 strike for ₹89.99, collecting the premium.
- Sell 1 OTM put at the 25,100 strike for ₹88.99, collecting the premium.
- You receive a net ₹11,634 upfront for the position. This is the most you can make.
Below 24,921 you lose, and the loss grows as Nifty falls.
Between 24,921 and 25,379 you profit, up to ₹11,634.
Above 25,379 you lose, and the loss keeps growing as Nifty rises.
Set-up: Sell 1 lot OTM Call and Sell 1 lot OTM Put with same expiration.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 23,650 | −6% | −₹82,616 |
| 24,400 | −3% | −₹33,866 |
| 24,900 | −1% | −₹1,366 |
| 25,150 | Unchanged | +₹11,634 |
| 25,400 | +1% | −₹1,366 |
| 25,900 | +3% | −₹33,866 |
| 26,650 | +6% | −₹82,616 |
How the Greeks affect it
When to use
Short Strangle is a range bound strategy. Its idle to execute Short Strangle for near month expiry in order to benefit from faster time decay.
- 1.Profit from range bound stock 2. Comparatively high yielding income strategy but less than Short Straddle3. Provides broader range of profitability 4. Time decay is beneficial.
Things to watch
- 1. Uncapped Risk on either side 2. Hedging cost would be high if stock gives any directional movement.
Short Strangle: backtested on NSE data
Real backtests of this structure on NSE data, each with its exact rules, a year of results before and after costs, and where it made and lost money.
- Fixed-distance OTM strangle245 trades
- Premium-matched strangle195 trades
- Delta-based short strangle246 trades
- IV-percentile short strangle14 trades
Short Strangle: questions
What is a Short Strangle strategy?
Short Strangle is a range bound strategy that aims to make money from sideways market and falling volatility.
When should you use a Short Strangle?
Short Strangle is a range bound strategy. Its idle to execute Short Strangle for near month expiry in order to benefit from faster time decay.
How do you set up a Short Strangle?
Sell 1 lot OTM Call and Sell 1 lot OTM Put with same expiration.
What is the maximum profit of a Short Strangle?
Maximum Profit is limited to total premium received. Profit is maximum between both the strike.
What is the maximum loss of a Short Strangle?
Short Strangle is open to unlimited risk if the stock moves above higher BEP( Strike +total premium) or below lower BEP ( Strike - total premium).
What is the breakeven of a Short Strangle?
With Nifty at 25,151, the example on this page breaks even at 24,921 and 25,379 at expiry.
Watch: Short Strangle videos
12:15Iron Condor vs Short Strangle: Hedging and Adjustments
15:32Straddle vs Strangle: Simple Ways to Tell Them Apart
11:16Long Strangle Strategy for Big Market Moves