What Is the Difference in Cost and Risk Profile between a Straddle and a Strangle?

A Long Straddle (same ATM strike) is more expensive than a Long Strangle (different OTM strikes) because the ATM options in the Straddle have higher intrinsic and extrinsic value. The higher cost of the Straddle means the underlying asset must move further to reach the break-even points, making the Strangle a lower-cost, lower-probability trade.

The risk profile for both long strategies is limited to the premium paid, but the Strangle requires a larger price movement to become profitable.