Strangle Calculator
Use this strangle option calculator to estimate the potential profit, loss, and breakeven prices of a long or short
strangle strategy. Enter your trade details and instantly see how buying or selling a call and a put with different
strike prices performs across various stock prices at expiration. You can also customize the chart range to
visualize outcomes across a wide range of price movements, helping you evaluate volatility-based strategies more
effectively.
How to Use the Options Strangle Calculator
How to Use the Options Strangle Calculator
This strangle calculator helps you analyze trades that profit from large price movements or from price stability, depending on whether you are buying or selling the strangle.
Follow these steps to use the calculator:
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Enter the stock’s current price
This is the current market price of the underlying stock.
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Select a call option and a put option
Choose a call and a put with the same expiration date but different strike prices.
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Enter the call and put strike prices
The call strike is typically above the current stock price and the put strike is typically below it.
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Enter the call and put premiums
These are the prices paid or received for each option contract.
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Select the position type
Choose a long strangle if you are buying both options, or a short strangle if you are selling both.
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Enter the expiration date
This determines when both option contracts expire and the final payoff is calculated.
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Set the chart range
Define the range of stock prices you want to analyze at expiration.
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View your results
The calculator will display total cost or credit, breakeven prices, maximum profit or loss, and a profit/loss chart.
Understanding the Strangle Options Strategy
What Is a Strangle Option Strategy?
A strangle is an options strategy that involves holding a call option and a put option on the same stock with the same expiration date, but at different strike prices. Strangles are often used when a trader expects a significant price move but is unsure of the direction.
This strategy is commonly used around earnings announcements, economic reports, or other high-volatility events.
What Is a Long Strangle?
A long strangle involves buying a call and a put at different strike prices with the same expiration date. This strategy profits when the stock makes a large move higher or lower.
Key characteristics of a long strangle:
- Direction neutral but volatility bullish
- Lower upfront cost than a straddle
- Maximum loss limited to the total premium paid
- Profits increase as the stock moves far beyond either strike price
The trade becomes profitable when the stock price moves above the call strike plus the total premium paid, or below the put strike minus the total premium paid.
What Is a Short Strangle?
A short strangle involves selling a call and a put at different strike prices with the same expiration date. This strategy profits when the stock price stays between the two strike prices and volatility remains low.
Important: Short strangles carry significant risk and are typically used by experienced traders.
Key characteristics of a short strangle:
- Direction neutral but volatility bearish
- Maximum profit limited to the total premium received
- Unlimited risk if the stock rises well above the call strike
- Large downside risk if the stock falls well below the put strike
Short strangles are best suited for stable markets where large price swings are unlikely.
When Do Traders Use Strangles?
- Anticipating high volatility with uncertain direction
- Trading earnings releases or major news events
- Seeking a lower-cost alternative to a straddle
- Taking advantage of overpriced or underpriced implied volatility
- Building neutral strategies that rely on price movement rather than trend direction