Chapter 06 · Section 6.1
Strangle vs Straddle
Why would a trader choose to sell a strangle rather than a straddle?
b) The risk is lower with a strangle.
Yes. Although the seller gives up a substantial amount of potential profit by selling a strangle rather than a straddle, he also holds less risk. Notice that the strangle requires more of a price move in both directions before it begins to lose money.Continue
a) The strangle is less expensive.