Strangle
Buying or writing a call and a put at different out-of-the-money strikes with the same expiry.
Formula
Long Strangle Cost = Call Premium + Put Premium; Break-evens = Call Strike + Total Premium, and Put Strike - Total Premium
Unit
₹
In depth
A strangle is a cheaper straddle that requires a larger move: both legs start out of the money, so the premium is lower and the break-evens are further apart. Written strangles are a common income strategy in India, collecting premium while the index stays within a band, and they carry unlimited loss on the call side and near-unlimited loss on the put side. The distribution flatters them — many small wins and rare very large losses — which is exactly the shape that makes a track record misleading. Margin requirements rise sharply when volatility rises, so a written strangle can force closure at the worst moment.
Worked example
Buy a 24,200 call at 190 and a 23,800 put at 110: cost 300, or ₹22,500 per lot. Break-evens are 24,500 and 23,500, so a 2.1% move is needed against 1.9% for the equivalent straddle.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Strangle” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.