Option Strangle (Long Strangle)
The long strangle, also known as
buy strangle or simply "strangle", is a neutral strategy in options
trading 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 stock and expiration date.
Only Banknifty Paid Strategy 6k
Get in Touch +91-9953573304
|
Buy 1 OTM Call
Buy 1 OTM Put |
The long options strangle is
an unlimited profit, limited risk strategy that is taken when the options
trader thinks that the underlying stock will experience significant volatility
in the near term. Long strangles are debit spreads as a net debit is
taken to enter the trade.
Unlimited Profit Potential
Large gains for the long
strangle option strategy is attainable when the underlying stock price makes a
very strong move either upwards or downwards at expiration.
The formula for calculating
profit is given below:
- Maximum
Profit = Unlimited
- Profit
Achieved When Price of Underlying > Strike Price of Long Call + Net
Premium Paid OR Price of Underlying < Strike Price of Long Put - Net
Premium Paid
- Profit =
Price of Underlying - Strike Price of Long Call - Net Premium Paid OR
Strike Price of Long Put - Price of Underlying - Net Premium Paid
Limited Risk
Maximum loss for the long
strangle options strategy is hit when the underlying stock price on expiration
date is trading between the strike prices of the options bought. At this price,
both options expire worthless and the options trader loses the entire initial
debit taken to enter the trade.
The formula for calculating
maximum loss is given below:
- Max Loss =
Net Premium Paid + Commissions Paid
- Max Loss
Occurs When Price of Underlying is in between Strike Price of Long Call
and Strike Price of Long Put
Breakeven Point(s)
There are 2 break-even points
for the long strangle position. The breakeven points can be calculated using
the following formulae.
- Upper
Breakeven Point = Strike Price of Long Call + Net Premium Paid
- Lower
Breakeven Point = Strike Price of Long Put - Net Premium Paid
Example
Suppose XYZ stock is trading
at $40 in June. An options trader executes a long strangle by buying a JUL 35
put for $100 and a JUL 45 call for $100. The net debit taken to enter the trade
is $200, which is also his maximum possible loss.
If XYZ stock rallies and is
trading at $50 on expiration in July, the JUL 35 put will expire worthless but
the JUL 45 call expires in the money and has an intrinsic value of $500.
Subtracting the initial debit of $200, the options trader's profit comes to
$300.
On expiration in July, if XYZ
stock is still trading at $40, both the JUL 35 put and the JUL 45 call expire
worthless and the options trader suffers a maximum loss which is equal to the
initial debit of $200 taken to enter the trade.
Note: While we have covered
the use of this strategy with reference to stock options, the long strangle is
equally applicable using ETF options, index options as well
as options on futures.
Banknifty Strategy How much charges its for intraday or Positional
ReplyDeleteAlready given in description please check once
Delete🛡 Banknifty option Strategy
ReplyDelete🔑Only one strategy
🧭Option Buying CE/ PE pair strategy
Price :₹6k
---------------------------------------------------
Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime
---------------------------------------------------
📩Get in touch📩
https://wa.me/919953573304
11th Oct 2019 9:45
ReplyDeleteBanknifty 17th OCT 30200 CE
Banknifty 17th OCT 27000 PE
Buy @ 50
11th Oct 2019 11:30
ReplyDeleteBanknifty 17th Oct 29500 CE
Banknifty 17th Oct 26600 PE
Buy @ 70
11th Oct 2019 2:15
ReplyDeleteBanknifty 17th Oct 29600 CE
Banknifty 17th Oct 26900 PE
Buy @75
This comment has been removed by the author.
ReplyDeleteBANKNIFTY 29500 CE 71
ReplyDeleteBANKNIFTY 27100 PE 71
STOPLOSS 31
TARGET 135 - 150
11.32 PM
14th Oct 2019 11:35
ReplyDeleteBanknifty 17th Oct 29500 CE
Banknifty 17th Oct 227100 PE
Buy @ 70
NIFTY 11500 CE 33
ReplyDeleteNIFTY 11200 PE 33
STOPLOSS 20
TARGET 59++
This comment has been removed by the author.
ReplyDeleteBANKNIFTY 29400 CE 73 - 74
ReplyDeleteBANKNIFTY 27100 PE 73-74
STOPLOSS 31
TARGET 135 - 150
1.22 PM
14th Oct 2019 2:40
ReplyDeleteBanknifty 17th Oct 29500 CE
Banknifty 17th Oct 227200 PE
Buy @ 60
14th Oct 2019 2:00
ReplyDeleteBanknifty 17th Oct 29500 CE
Banknifty 17th Oct 27400 PE
Buy @ 75
Thank You so much sir sharing valuble info for strangle...lots of love
ReplyDeletewarm regarda,
priyanka Pal
16th Oct 2017 12:00 PM
ReplyDeleteBanknifty 17th Oct 29200 Ce
Banknifty 17th Oct 28000 PE
@50
16th Oct 2017 12:05 PM
ReplyDeleteBanknifty 17th Oct 29100 CE
Banknifty 17th Oct 28200 PE
@75
17th Oct 2017 11:: PM
ReplyDeleteBanknifty 17th Oct 29000 CE
Banknifty 17th Oct 28000 PE
@5
18th Oct 2019 2:00
ReplyDeleteBanknifty 24th Oct 27000 PE
Banknifty 24th Oct 31100 CE
@15
Thank you so much beautiful strategy. Special thanks to Rahulprasad Yadav
ReplyDeleteWarm regard,
devanti Devi
23rd Oct 2019 1:30
ReplyDeleteBanknifty 24th Oct 29200 PE
Banknifty 24th Oct 30100 CE
@55
Target: 110
SL: 30
23rd Oct 2019 1:30
ReplyDeleteBanknifty 24th Oct 28900 PE
Banknifty 24th Oct 30300 CE
@25
Target: 50
SL:10
24th Oct 2019 9:30
ReplyDeleteBanknifty 24th Oct 28900 PE
Banknifty 24th Oct 30300 CE
Buy around at 4-5
Target: 50
Quantity =3k-2k
24th Oct 2019 10:55
ReplyDeleteBanknifty 24th Oct 28700 PE
Banknifty 24th Oct 30000 CE
Buy around at 2-3
Quantity =3k-2k
🏌Price Action Trading Course🎯
ReplyDelete💵Fees:💰55K ⏰Duration :1 Week
----------------------------------------------------------------------
🌎Market Global trend & Indian Market trend
👑 Global tricks strategy (Live scanner/EOD Scanner)
🗼Pre-market Scrip Selection(EOD Scanner)
💻Live Market Scrip Selection(Live Scanner)
🕘Day Trading strategy(Live Scanner)
🛡Positional Trading strategy (EOD/Live Scanner)
💫 Stock Option Writing Strategy(Intraday/Positional)
🎲 Stock Option Trading Strategy (Intraday/Positional)
🛠 Index Option Trading Strategy (Intraday/Weekly)
🏆 Index Option Writing strategy (Intraday/Weekly)
📞Contact Us: +91-9953573304 for Learning price action trading Course
Great work Rahul sir , appreciate the effort. I think i will stick to the basics and use your Forex course ideas . Longer term is much less riskier and easier on the mind as long as we follow the rules. The trading psychology and being in the zone i think are the most important aspects of trading . we need to master that and success will follow
ReplyDeleteRegard,
Sofiya singh