Long Strangle Calculator
A Long Strangle is a highly leveraged volatility-expansion strategy. It functions similarly to a straddle but utilizes cheaper, out-of-the-money options to drastically reduce entry cost at the expense of a wider breakeven range.
Constructed by purchasing a cheaper OTM call option and a cheaper OTM put option. Because the options are OTM, the net debit paid is significantly lower. However, the stock must travel a much larger distance in either direction to achieve profitability.
Simulates P&L if the underlying closes at any price at expiry.
Frequently Asked Questions
What is the main difference between a Straddle and a Strangle?
A Strangle is much cheaper to enter than a Straddle because it uses OTM options instead of ATM. However, it requires a larger price breakout to reach breakeven.
What are the two breakeven points for a Strangle?
Lower Breakeven (Put Strike - Net Premium Paid) and Upper Breakeven (Call Strike + Net Premium Paid).