{"id":7837,"date":"2025-07-15T10:33:25","date_gmt":"2025-07-15T10:33:25","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7837"},"modified":"2025-07-15T10:33:26","modified_gmt":"2025-07-15T10:33:26","slug":"strangle-option-strategy","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/strangle-option-strategy\/","title":{"rendered":"Strangle Option Strategy"},"content":{"rendered":"<p>A <strong>Strangle<\/strong> is an options <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/trading\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>trading<\/a> strategy used when you think the price of a stock will move <strong>a lot<\/strong>, but you&#x2019;re <strong>not sure in which direction<\/strong>&#x2014;up or down.<\/p>\n\n\n\n<p>Think of it like this:<br>You bet that a cricket match will either be a huge win or a big loss, not a close game. You&#x2019;re not choosing a side&#x2014;you just expect <strong>big action<\/strong>.<\/p>\n\n\n\n<h2 id=\"how-does-a-strangle-work\" class=\"wp-block-heading\">How Does a Strangle Work?<\/h2>\n\n\n\n<p>A Strangle involves <strong>two option contracts<\/strong>:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>A Call Option<\/strong> (betting the price will go up)<\/li>\n\n\n\n<li><strong>A Put Option<\/strong> (betting the price will go down)<\/li>\n<\/ol>\n\n\n\n<p>Both have the <strong>same expiry date<\/strong> but <strong>different strike prices<\/strong>.<\/p>\n\n\n\n<h2 id=\"types-of-strangle-strategies\" class=\"wp-block-heading\">Types of Strangle Strategies<\/h2>\n\n\n\n<h3 id=\"1-long-strangle\" class=\"wp-block-heading\">1. <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/long-strangle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Long Strangle<\/a><\/strong><\/h3>\n\n\n\n<p>You <strong>buy<\/strong> both:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Call Option (above current price)<\/li>\n\n\n\n<li>A Put Option (below current price)<\/li>\n<\/ul>\n\n\n\n<p>Used when you expect <strong>high <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/volatility\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">volatility<\/a><\/strong> &#x2014; like company results, budget announcements, or major news.<\/p>\n\n\n\n<p><strong>Limited loss<\/strong>, <strong>unlimited profit<\/strong> (if the move is big)<\/p>\n\n\n\n<p><strong>Example<\/strong>:<br>Stock is at &#x20B9;100<br>Buy Call at &#x20B9;110 + Put at &#x20B9;90<br>If stock jumps to &#x20B9;130 or falls to &#x20B9;70 &#x2014; you earn big<br>If stock stays at &#x20B9;100 &#x2014; you lose the premium paid<\/p>\n\n\n\n<h3 id=\"2-short-strangle\" class=\"wp-block-heading\">2. <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/short-strangle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Short Strangle<\/a><\/strong><\/h3>\n\n\n\n<p>You <strong>sell<\/strong> both:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Call Option (above current price)<\/li>\n\n\n\n<li>A Put Option (below current price)<\/li>\n<\/ul>\n\n\n\n<p>Used when you expect the stock will <strong>not move much<\/strong> &#x2014; stay within a tight range.<\/p>\n\n\n\n<p><strong>Limited profit<\/strong>, <strong>unlimited risk<\/strong><\/p>\n\n\n\n<p><strong>Example<\/strong>:<br>Stock is at &#x20B9;100<br>Sell Call at &#x20B9;110 + Put at &#x20B9;90<br>If stock stays between &#x20B9;90&#x2013;&#x20B9;110, you keep the premium<br>If stock jumps\/falls heavily &#x2014; <strong>big loss<\/strong><\/p>\n\n\n\n<h2 id=\"benefits-of-a-long-strangle\" class=\"wp-block-heading\">Benefits of a Long Strangle<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Low cost entry<\/strong> &#x2013; cheaper than buying just a call or put near the current price<\/li>\n\n\n\n<li><strong>Profit from big moves<\/strong> in either direction<\/li>\n\n\n\n<li><strong>Limited loss<\/strong> = total premium paid<\/li>\n\n\n\n<li>Great for <strong>volatile markets<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 id=\"risks-of-strangle\" class=\"wp-block-heading\">Risks of Strangle<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the stock <strong>doesn&#x2019;t move much<\/strong>, both options may expire worthless<\/li>\n\n\n\n<li>Loss is limited to the <strong>total premium paid<\/strong>, but still a loss<\/li>\n<\/ul>\n\n\n\n<h2 id=\"when-to-use-a-strangle\" class=\"wp-block-heading\">When to Use a Strangle?<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Around <strong>earnings announcements<\/strong><\/li>\n\n\n\n<li>Before <strong>budget or policy events<\/strong><\/li>\n\n\n\n<li>When charts show <strong>high potential movement<\/strong>, but no clear direction<\/li>\n<\/ul>\n\n\n\n<h2 id=\"real-life-example\" class=\"wp-block-heading\">Real-Life Example<\/h2>\n\n\n\n<p>Tanya expects <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nifty\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Nifty<\/a> to move sharply after the RBI meeting but isn&rsquo;t sure up or down.<br>Nifty is at 19,000. She buys:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A Call at 19,300<\/li>\n\n\n\n<li>A Put at 18,700<\/li>\n<\/ul>\n\n\n\n<p>If Nifty rises to 19,800 or falls to 18,200, <strong>she makes money<\/strong>.<br>If Nifty stays flat, she loses only the premium.<\/p>\n\n\n\n<h2 id=\"conclusion\" class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>The <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/strangle-option-strategy\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Strangle Option Strategy<\/a> is perfect for uncertain but volatile situations<\/strong>. It helps traders take advantage of big price moves in <strong>either direction<\/strong>, while keeping losses limited. It&#x2019;s simple, powerful, and often used by smart options traders.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Strangle is an options trading strategy used when you think the price of a stock will move a lot, but you&#x2019;re not sure in which direction&#x2014;up or down. Think of it like this:You bet that a cricket match will either be a huge win or a big loss, not a close game. You&#x2019;re not [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7837","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7837\/revisions"}],"predecessor-version":[{"id":7838,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7837\/revisions\/7838"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}