The long strangle (buying a strangle) is a market-neutral options trading strategy that consists of buying an out-of-the-money call and put option on a stock (in the same expiration cycle). While the strategy is technically directionally neutral, a long strangle profits from a significant stock price movement in either direction or an increase in implied volatility.
In this video, you’ll learn:
1. What are the characteristics of the long strangle strategy?
2. What does the expiration risk graph look like for a long strangle position?
3. How do long strangles perform when the stock price changes?
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