- It is possible to profit no matter if the share price goes up or down.
- A strangle has a lower net debit than the bought straddle.
- A higher profit in percentage terms than a straddle on the same move in the underlying stock, provided that breakeven point has been exceeded.
- Since both options are out-of-the-money, time decay on the options is not as rapid as they are with the bought straddle.
- Unlimited profit if the underlying asset continues to move in one direction.
- Since the trade is non-directional your outlook can be wrong and still profit from this strategy.
- The maximum loss is limited to the debit paid.
- If volatility is low at the time of purchase and volatility rises, both options could profit even without an appreciable change in the stock price.
- Smaller capital outlay to trade strangles than trading the underlying shares.
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