The strangle, however, will enjoy a maximum profit over a 10-point range, while the straddle achieves peak profitability at the 48 strike only. Also note how the strangle is profitable over a wider range and how its losses will always be one point less than the straddle's. As with all option plays, it's your expectation for how far and how fast the underlying stock or index will move that should determine the type of strategy to use. Buying or selling straddles and strangles isn't for everyone. It requires strict attention to the price and volatility of the underlying stock, and to the implied volatilities of the options.
Commissions are also a consideration, since two options are involved.
Selling these positions is suited for the more experienced trader, due to the unlimited risk that comes with the potential to profit if the underlying closes within a certain range. All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.