Can you profit from big price swings without betting on which way they'll go?
Strangle (options)
Can you profit from big price swings without betting on which way they'll go?
Imagine you're betting on the price of a video game console. You don't know if it'll go up or down in price, but you want to make money if there's a big price change.
A strangle lets you bet on a big price swing without picking a direction. You're okay with the price going high or low, just that it moves a lot.
Example
You buy a call option for 300 and a put option for 200. The console's price jumps to 500 or drops to 100. You profit because the price moved significantly.
Remember this
A strangle profits from significant price movements in either direction, not the direction itself.
Text adapted from Wikipedia, licensed under CC BY-SA 4.0.
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Educational content, not financial advice.
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