Strangle
An OTM call and an OTM put — a lower-cost cousin of the straddle that needs a bigger move to pay off.
Definition
Strangle is an options strategy that combines a call and a put at different out-of-the-money strikes with the same expiry — typically a call above the spot and a put below it. A long strangle buys both legs to profit from a large move in either direction; a short strangle sells both to profit if the underlying stays inside the two strikes.
Why it matters
Because both legs are out-of-the-money, a long strangle is cheaper than an at-the-money straddle — but it needs a larger move to break even, since the underlying must travel past the further strike plus the premium paid. Short strangles are a common premium-selling structure in range-bound markets, with defined upside (the credit received) and large risk on a sharp breakout.
Example
With NIFTY at 24,000 you buy the 24,300 call and the 23,700 put for a combined premium of, say, 180 points (illustrative). You profit only if NIFTY closes above 24,480 or below 23,520 by expiry. Between those levels the long strangle loses; beyond them, profit grows with the size of the move.
See it live
Compare out-of-the-money call and put premiums on TradePulse's live option chain to build a strangle.