Short Strangle
Definition
Selling an out-of-the-money call and an out-of-the-money put simultaneously to collect premium, profiting when the underlying price stays between the two strikes at expiration.
Example
A short strangle profits when the underlying stays between the two strikes. Maximum profit is the net premium collected.
Related Terms
Frequently Asked Question
What is a Short Strangle?
A Short Strangle involves selling an OTM call and OTM put to collect premium, profiting from low volatility and price stability. The strategy has unlimited theoretical risk on the call side.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.