Volatility
Long strangle
Buy an out-of-the-money call and an out-of-the-money put.
Index moves sharply, either wayOpens for a debitNew to optionsLoss capped
How it works
A cheaper long straddle. Both options cost less because both are out of the money, so a smaller outlay buys the same shape.
What it costs you when you are wrong
Cheaper to put on and harder to win. The index has to travel further before either leg is worth anything, and both expire worthless if it does not.
The position
- 1Buy the call 3 strikes out of the money
- 2Buy the put 3 strikes out of the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 2
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.