Short Strangles for Beginners: Options Learning Center
Welcome to the Options Learning Center, where we will explore a wide range of topics and ideas related to options trading. This video will explain short strangles!
The short strangle strategy anticipates volatility to decrease and the underlying security to trade within a specific price range. The short strangle option strategy involves selling a call option and selling a put option at a lower strike price.
Maximum loss can be significant if the underlying security aggressively moves in either direction. Maximum profit is the premium received for the short call and short put (Net Credit).
The short strangle strategy succeeds if the underlying security is trading within the range between downside breakeven (lower strike - Net Credit) and upside breakeven (higher strike + Net Credit) at expiration. Maximum profit is achieved if the underlying security is between the strike prices at expiration.