Strangle option strategy
Strangle like Straddle is a volatility strategy that aims to make money either ways from a stock/index soaring up or plummeting down.
Payoff at expiry
Nifty, lot size 65 · Nifty future 22,923 · 19 Oct 2026Legs
| Action | Option | Strike | Lots | Qty | Premium |
|---|---|---|---|---|---|
| BUY | OTM Call | 22,950 | 1 | 65 | ₹111.67 |
| BUY | OTM Put | 22,850 | 1 | 65 | ₹91.67 |
How it works
- Buy 1 OTM call at the 22,950 strike for ₹111.67, paying the premium.
- Buy 1 OTM put at the 22,850 strike for ₹91.67, paying the premium.
- You pay a net ₹13,217 upfront for the position. This is the most you can lose.
Below 22,647 you profit, and profit grows as Nifty falls.
Between 22,647 and 23,153 you lose, up to ₹13,217.
Above 23,153 you profit, and profit keeps growing as Nifty rises.
Set-up: Buy 1 lot OTM Call and 1 lot OTM Put with same expiration. Expiry is at distant away to avoid exponential time decay that happens as expiration approaches.
What happens if Nifty moves
Profit or loss at expiry| Nifty at expiry | Move | Profit / loss |
|---|---|---|
| 21,550 | −6% | +₹71,283 |
| 22,250 | −3% | +₹25,783 |
| 22,700 | −1% | −₹3,467 |
| 22,900 | Unchanged | −₹13,217 |
| 23,150 | +1% | −₹217 |
| 23,600 | +3% | +₹29,033 |
| 24,300 | +6% | +₹74,533 |
How the Greeks affect it
When to use
Outlook is Directional Neutral in Strangle; Ideal when you are looking forward for increasing volatility with stock price moving explosively in either direction.
- Being Directional Neutral, you can participate in either ways volatility jumps.
- Ideal to trade Strangle would be when you are expecting wider movement in stocks.
Things to watch
- Time decay is harmful to Strangle as a time day accelerates exponentially in last week of expiry.
- As BEP in Strangle is wider. If stock fails to give desired move, one can lose the premium.
Strangle: questions
What is a Strangle strategy?
Strangle like Straddle is a volatility strategy that aims to make money either ways from a stock/index soaring up or plummeting down.
When should you use a Strangle?
Outlook is Directional Neutral in Strangle; Ideal when you are looking forward for increasing volatility with stock price moving explosively in either direction.
How do you set up a Strangle?
Buy 1 lot OTM Call and 1 lot OTM Put with same expiration. Expiry is at distant away to avoid exponential time decay that happens as expiration approaches.
What is the maximum profit of a Strangle?
Maximum Profit is unlimited beyond Lower BEP (Put Strike minus premium) or Higher BEP (Call Strike plus premium).
What is the maximum loss of a Strangle?
It is Net debit Strategy as you have bought both Call & Put; Maximum Loss is limited to total premium paid.
What is the breakeven of a Strangle?
With Nifty at 22,923, the example on this page breaks even at 22,647 and 23,153 at expiry.
Watch: Strangle videos
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