Long Strangle Calculator
Buy an out-of-the-money put and an out-of-the-money call with the same expiry. You profit if the stock makes a big move in either direction, for a lower cost than a straddle.
Stock
Put you’re buying (lower)
Call you’re buying (higher)
Calendar days to expiry: 30
Manual settings
Left blank, each option's IV is worked out from its premium.
Has only a small effect. Leave at 4% if unsure.
Example trade shown. Replace with your own numbers.
Profit / loss by stock price
Profit / loss over time
Values before expiry are estimates using Black-Scholes and each option’s implied volatility. Chances use the volatility of the option closest to today’s price. Assumes both options are held to each date shown and ignores closing fees and dividends. For educational purposes only.
What is a Long Strangle?
A long strangle is a way to profit from a big move in a stock when you don't know which way it will go. You buy an out-of-the-money put below the current price and an out-of-the-money call above it, with the same expiry date.
If the stock moves sharply up, the call gains. If it moves sharply down, the put gains. Either way, you profit once the move takes the stock beyond one of your break-even prices. If the stock stays between the two strikes, both options expire worthless and you lose what you paid. Your risk is limited to that cost.
How to use this calculator
1. Enter the stock's current price. Adding the ticker symbol is optional.
2. Enter the put you're buying: its strike price (the lower one) and its premium per share.
3. Enter the call you're buying: its strike price (the higher one) and its premium per share.
4. Set the expiry date, or type the number of days to expiry.
5. Enter how many strangles you're buying and any fees per strangle.
The calculator updates as you type. You'll see:
- What the strangle costs (your maximum loss), unlimited maximum profit, and the two break-even prices.
- How big a move, up or down, you need to make a profit, and your chance of getting it.
- Your chance of losing the full cost, and your profit or loss if the stock rises 10% by expiry.
- A chart of your profit or loss at different stock prices, today, at two dates in between, and at expiry. Hover over the chart (or tap it on a phone) to read exact values.
- A table of profit or loss by stock price and date, shown in dollars or as a percentage of your cost.
You can find the premiums in your broker's option chain. Use the mid-price between the bid and the ask for a realistic figure. Under "Manual settings" you can enter one implied volatility for both options, change the interest rate, or set the price range shown in the chart and table.
When is a Long Strangle a good choice?
- You expect a very big move but aren't sure of the direction.
- You want a cheaper alternative to a straddle and accept needing a bigger move to profit.
- Implied volatility is low and you expect it to rise.
When might it not suit?
- Just before earnings, when implied volatility is usually already high and often drops sharply afterwards (IV crush).
- You expect a modest move. The stock has to travel beyond your strikes plus the cost before you make money.
- You expect the stock to stay in a range. Time decay works against you every day.
Things to keep in mind
- Between the two strikes at expiry, both options expire worthless and you lose the full cost.
- Strangles are cheaper than straddles, but they lose more often. Check the chance of profit as well as the cost.
- Many traders close strangles early, either once the move has happened or to recover some value before time decay speeds up.
This calculator gives estimates for educational purposes only. It isn't financial advice. Option prices before expiry are modelled, and real prices will differ.