Long Strangle Strategy
A cheaper way to bet on a huge move — needs a bigger move to win.
What is the Long Strangle Options Strategy?
A Long Strangle is very similar to a Long Straddle — you profit from big moves in either direction. The difference is you use cheaper options that are slightly away from the current price. This makes the trade cheaper but needs a bigger move to profit.
Why is it Called "Long Strangle"?
A "strangle" squeezes from both sides — a call above and a put below. If the price breaks out of either end strongly enough, you win. "Long" means you bought both.
How Does the Long Strangle Trade Work?
- 1 Step 1 — Find a stock with a major event that could cause a very large move.
- 2 Step 2 — Buy a call 3–5% ABOVE the current price.
- 3 Step 3 — Buy a put 3–5% BELOW the current price.
- 4 Step 4 — Pay the combined cost — less than a straddle.
- 5 Step 5 — If the stock moves explosively either way, one option pays off big.
Types of Long Strangle Strategies
Long Strangle (Standard)
Buy OTM call and OTM put. Cheaper than a straddle, needs a bigger move.
When to Use the Long Strangle Strategy?
- Before a very big event — drug approval, court ruling, takeover
- When a Straddle feels too expensive
- When you expect a 10%+ extreme move
- When option prices are low
Profit and Loss of the Long Strangle
Before looking at the chart, here is a plain-English summary of what you can make and what you can lose.
Unlimited on the upside; very large on the downside.
The total premium paid.
Upper: call strike + total premium. Lower: put strike − total premium.
Long Strangle Payoff Diagram
The chart below shows how profit/loss changes with the underlying price at expiry. Green zone = profit, red zone = loss.
Long Strangle Example Trade
| Action | Type | Strike | Premium |
|---|---|---|---|
| Buy | Call | $185 | -$3.00 |
| Buy | Put | $175 | -$2.80 |
Cost $5.80 vs $10.50 for the Straddle — 45% cheaper. Apple jumps to $205 — call worth $20, profit = $14.20.
Pros & Cons of the Long Strangle
- Cheaper than a Straddle
- Profits from explosive moves
- Unlimited profit potential
- Can profit from a sudden spike in market fear
- Needs a BIGGER move than a Straddle
- Both options can expire worthless
- Time decay eats value fast
- IV crush after events
Long Strangle Frequently Asked Questions
Quick Quiz
Answer all questions and check your score.
1 A Long Strangle uses:
2 Compared to a Long Straddle, a Long Strangle is:
3 Maximum loss on a Long Strangle is:
4 A Long Strangle profits when:
5 Long Strangle is preferred over Long Straddle when: