Long strangle strategy — how it works
A long strangle is a cheaper big-move bet using out-of-the-money options. Learn how to build and practise a strangle on Nifty Paper Trade.
A long strangle buys an out-of-the-money call and an out-of-the-money put (same expiry, different strikes). Like a straddle it profits from a big move either way, but because OTM options are cheaper, it costs less — and needs a bigger move to pay off.
Payoff
- Max loss: total premium paid (both legs) — lower than a straddle.
- Profit: large on a big move up or down.
- Breakevens: call strike + total premium (upside), put strike − total premium (downside).
How to build it
- Open the Strategy Builder.
- Buy an OTM Call (above spot) and Buy an OTM Put (below spot).
- Review the payoff and deploy both legs.
Straddle vs strangle
- Straddle: ATM strikes — costs more, profits on a smaller move.
- Strangle: OTM strikes — costs less, needs a bigger move.
FAQ
Why choose a strangle over a straddle?
It's cheaper (lower max loss), useful when you expect a very large move and want to pay less premium.
What's the downside?
It needs a bigger move to break even, and a flat market means both OTM options can expire worthless.
Which strikes should I pick?
Symmetric OTM strikes around the spot; wider = cheaper but needs a bigger move.