Long Strangle
A long strangle is similar to the long straddle, but is less costly to execute because the options are out of the money. This strategy requires a larger price move to be profitable; it would be used during extremely volatile price movements because of its lower execution costs.
Profits are theoretically unlimited in either direction. Losses are limited to the total premium paid.
Position Premium Dollar Premium Delta Buy one $21 crude oil call $0.75 $750 +.38 Buy one $19 crude oil put - Net debit - Net delta $0.72 $1.47 $720 $1,470 -.34 +.04 Maximum risk $1.47 per barrel $1,470 per position Maximum profit Unlimited in either direction Break-even futures price $17.50 and $22.47 Position Premium Dollar Premium Delta Buy one $270 gold call $3.00 $300 +.30 Buy one $250 gold put - Net debit - Net delta $3.00 $6.00 $300 $600 -.30 0 Maximum risk $6.00 per ounce $600 per position Maximum profit Unlimited in either direction Break-even futures price $244 and $276
THERE IS A RISK OF LOSS IN FUTURES TRADING AND IS NOT SUITABLE FOR
ALL INVESTORS. ONLY RISK CAPITAL SHOULD BE USED WHEN TRADING FUTURES.
Copyright 2008 Capitol Commodity Services, Inc. All Rights Reserved.
Education
- Futures Education
- Options Information
- Options Strategies
- Long At-the-Money Call
- Short Out-of-the-Money Call
- Covered Call
- Ratio Write
- Long Out-of-the-Money Call
- Long At-the-Money Put
- Short Out-of-the-Money Put
- Short Covered Put
- Bull Call Spread
- Bear Call Spread
- Bear Put Spread
- Bull Put Spread
- Long At-the-Money Straddle
- Long Strangle
- Short At-the-Money Straddle
- Short Strangle
- Call Ratio Backspread
- Put Ratio Backspread
- Synthetic Long Put
- Synthetic Long Call
- Synthetic Short Futures
- Synthetic Long Futures
- Fence
