Strategy Overview
High RiskIntermediateVolatile
A long strangle is similar to a straddle but uses OTM options. You buy an OTM call and OTM put, reducing cost but requiring a bigger move to profit.
Max Profit
Unlimited
Max Loss
Total premium paid
Breakeven
Strikes +/- total premium (two breakevens)
Probability
~30% win rate
hist. est.
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Example Setup Calculator
$
Debit Paid
$600
Max Profit
Unlimited
Max Loss
$600
Breakeven
$94.00 / $106.00
Strategy Components
BUY OTM CALL
Buy OTM call
BUY OTM PUT
Buy OTM put
When to Use
- You expect a very big move
- You want lower cost than straddle
- Major catalyst with uncertain outcome
- IV is relatively low
Best Market Conditions
- Low IV before catalyst
- High-impact binary events
- Technical breakout from range
Best Practices
- Requires bigger move than straddle
- Choose strikes based on expected move
- Give more time for the move to happen
- Close quickly on big moves
Ready to Trade?
Review Long Strangle and practice it in paper trading with the school workflow.
Paper Trading