Long 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 long strangles!
The long strangle strategy anticipates volatility to rise and the underlying security to move significantly in either direction. The long strangle option strategy involves buying a call option and buying a put option at a lower strike price.
Maximum loss is the premium paid for the long call and long put (Net Debit). Maximum profit is unlimited, as the security can theoretically rise indefinitely or go to zero.
The long strangle strategy succeeds if the underlying security breaks through the range, trading below the downside breakeven (lower strike - Net Debit) or above the upside breakeven (higher strike + Net Debit) at expiration.