Short Strangle
Options strategy · Level 4 · Naked options
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Sell an OTM call and an OTM put. Wider profit zone than the straddle, smaller premium, same undefined risk.
Where Tradecraft teaches it
Level 4 · Naked options, in the lesson “Short straddles & strangles”: Selling volatility, breakevens and margin, and how to manage the tested and untested sides.
Related terms
- Short Naked CallSell a call without owning the stock or a higher call.
- Short StraddleSell an ATM call and an ATM put. Maximum theta collection — and maximum exposure to a big move.
- Delta hedgingTrading the underlying (or futures) to offset a position’s delta so small moves barely change P&L, leaving gamma, theta and vega; it must be redone…
- Inverted strangleShort put strike above the short call strike, usually after rolling the untested side too far; at expiry it is worth at least the gap between the…
- Short vegaLosing money when implied volatility rises, even if the stock doesn’t move.
- Short volAny position that profits when volatility falls or realizes below what options priced — selling straddles, strangles and puts, or holding…