Long strangle

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The long strangle is a neutral-outlook options trading strategy that involve the simultaneous buying of a slightly out-of-the-money put and a slightly out-of-the-money call of the same underlying security and expiration date. It is an unlimited profit, limited risk strategy that is taken when the options trader thinks that the price of the underlying security will experience high volatility in the near term. The long strangle is a debit spread as a net debit is taken to enter the trade.

[edit] References

• McMillan, Lawrence G. (2002). Options as a Strategic Investment, 4th ed., New York : New York Institute of Finance. ISBN 0-7352-0197-8. 

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