Options / Long strangle
Payoff at expiry for a generic example with the stock at 100. Green is profit, red is loss, dashed lines are break-even prices.
You buy an out-of-the-money call and an out-of-the-money put. It costs less than a straddle but needs a bigger move to profit.
When it is used: When you expect a large move in either direction and want a cheaper entry than a straddle.
Main risk: You lose the full cost if the stock finishes between the two strikes.
- Net cost
- $380 per contract
- Max gain
- Large
- Max loss
- -$380
- Break-even
- 89.2 / 110.8
- Legs
- 2
The legs in this example
| Action | Contract | Strike | Example price |
|---|---|---|---|
| Buy | 1 call | strike 107 | $2.00 per share |
| Buy | 1 put | strike 93 | $1.80 per share |
The Greeks for this strategy
The Greeks measure what moves the price of an option. The values below are model estimates for the generic example (stock at 100, 40% volatility, three months to expiry), only to show the direction of each effect.
| Greek | What it measures | This example | What it means here |
|---|---|---|---|
| Delta | How much the position gains or loses for a $1 move in the stock, per 100 shares. | +8 shares | Gains when the stock rises. |
| Gamma | How fast delta changes as the stock moves. | +3.73 | Delta grows in your favour as the stock moves your way. |
| Theta | Value gained or lost each day from time passing, all else equal. | -8.18 $/day | Time passing costs you every day, including weekends. |
| Vega | Change in value for a one-point rise in implied volatility. | +37.31 $/pt | Rising implied volatility helps you. |
Research that fits this view: expected prices vs today
- All companies we cover, with ratings
- SEC filing changes (events that can move a stock)
- How we rate and track calls
Results for this strategy
We track our own hypothetical examples privately and publish each result at least 30 days after the play has closed, wins and losses together, once there are enough closed plays to say something. None have closed yet. This table will list every closed play with its expiry result and a link to the research it came from.
Back to all option strategies · How we track results