Comparison of “Short Straddle” and “Short Strangle” strategies

This item was filled under [ Option Strategies ]

One of the most popular strategies to enjoy time decay is Short Straddle. Short Strangle strategy has lot of similarity to this.

Let’s look at them from different perspective and see the differences:

Compare Short Straddle-Strangle

 

Hope this helps you in selecting right strategy.  Feel free to express your views by leaving comment below.

Be Sociable, Share!
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Comments on “Comparison of “Short Straddle” and “Short Strangle” strategies”

  • Raunak Agarwal
    2 June, 2010, 17:59

    Content management has to be appreciated. Compiled it beautifully. 

  • Sreenivas
    27 November, 2014, 6:22

    Hi,
       Can Long strangle be constructed using ITM options? Suppose the Nifty is trading at 8478, long strangle position would be:
    Long 8400 Call dec series@187
    Long 8600 Put Dec series @145 so the net debit is 332/-
    Please advise…..

  • Trader anup
    3 January, 2015, 8:43

    Nothing stops you from constructing ITM strangle. As ITM options are costly, your net debit hence the risk, will be larger on the trade.
    This will also push the break-even points away. The strategy is used when breakout is expected soon. In reality, market can remain in range for long time. With each passing day in the range, probability of breakout increases hence cutting loss short after few days will be emotionally difficult.

Leave a Comment