Short strangle
Sell an out-of-the-money put and call. Collect premium while nothing happens — and carry an undefined tail.
The view: Quiet, and quieter than the market is pricing.
Construction
| Leg | Qty | Strike at 100 spot |
|---|---|---|
| Short put | 1 | 90 |
| Short call | 1 | 110 |
Loading chart…
- Max profit
- +54
- Max loss
- Unlimited
- Breakeven
- 89.46 / 110.54
- Net cash
- +54
When it fits
When implied volatility looks expensive relative to what you expect to be realised. It wins most of the time, which is exactly what makes it dangerous.
What goes wrong
- Losses are unbounded on the upside and very large on the downside.
- A high win rate hides the shape: many small gains and occasional catastrophic ones.
- Margin requirements expand as the position moves against you, forcing you out at the worst moment.
Try it properly
The chart above is the real pricing model, limited to three sliders. To change strikes, add legs, switch to futures, or price it against your own volatility assumption, open it in the options P&L calculator — the link under the chart carries this exact position across.
Education, not advice. Payoffs ignore commission, bid-ask spread, assignment risk and financing.