Short Strangle
Sell Call and Put at different strikes
Positions in Chart: Sell 1 lot of 26000 CE + 1 lot of 25600 PE. Spot price: 25800
Setup
Sell OTM Call + Sell OTM Put (different strikes)
When to Use
- Profit from low volatility, wider profit zone than short straddle
Market Outlook
Volatility Expectation↘Expected to Fall Sharply
Price Direction→Expected to Stay Flat
Risk & Reward
Breakeven PointCall Strike + Total Premium OR Put Strike - Total Premium
Max Contract LossUnlimited
Max Position LossUnlimited
Strategy Details
Complexity LevelHigh Risk
DirectionNeutral - Not much move
VolatilityDecaying
Number of Legs2 Leg
Strategy TypeCredit
Hedging CapabilityNo Hedging or Naked
Description
A short strangle involves selling a call and put at different strike prices. It provides a wider profit zone than a short straddle
Example
If NIFTY is at ₹25,800, you sell a ₹26,000 Call for ₹100 and a ₹25,600 Put for ₹90, receiving ₹190 total. You profit if NIFTY stays between ₹25,410 and ₹26,190.
This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.
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