Options Trading Strategy №5: Sell Strangle

Strategy Meaning

Strangle in English means "to choke, to suppress."

Selling Strangle refers to simultaneously selling CALL and PUT options.

Core Assumption of the Strategy: The market will remain low volatility, and the underlying asset price will stay between the two strike prices before expiration.

Strategy Structure (Example)

Sell PUT: Strike Price 63, Premium 0.33

Sell CALL: Strike Price 72, Premium 0.33

If on the expiration date CLZ8 price does not fall below 63 and does not exceed 72,

The seller receives the entire premium as profit.

Maximum Profit

(0.33 + 0.33) × 1 × 1000 = 660 USD, where:

1 —— Contract Quantity

1000 —— Contract multiplier for crude oil futures CL

0.33 —— Premium for a single option

Break-even Point

Lower: 63 − (0.33 + 0.33) = 62.34

Upper: 72 + (0.33 + 0.33) = 72.66

When the price breaks the range 62.34–72.66,

Selling Strangle starts to incur losses.

Risk Warning

The maximum loss of this strategy is theoretically unlimited,

Use it with caution.