What Is the Primary Difference between a “Short Strangle” and a “Short Straddle” Options Strategy?
Both are volatility-selling strategies that profit if the underlying asset's price remains stable. A short straddle involves selling both a call and a put option with the same strike price and expiration date.
A short strangle involves selling both a call and a put option with different strike prices (usually out-of-the-money) but the same expiration. The short strangle collects less premium but has a wider break-even range, making it less risky.
Glossar
Straddle
Strategy ⎊ A straddle is an options trading strategy involving the simultaneous purchase or sale of both a call option and a put option on the same underlying asset.
Short Straddle
Strategy ⎊ A short straddle, within cryptocurrency derivatives, represents a neutral options strategy predicated on anticipating minimal price movement in the underlying asset.
Strangle
Definition ⎊ The strangle is a neutral options strategy involving the simultaneous purchase of a call option and a put option on the same underlying asset, with the same strike price but different expiration dates.
Short Strangle
Construction ⎊ The Short Strangle is a non-directional options trading Construction involving the simultaneous sale of an out-of-the-money call option and an out-of-the-money put option on the same underlying asset and expiration date.