Strangle
An options strategy involving buying a call and a put at different strike prices, profiting from a large move in either direction at a lower cost than a straddle.
Explained Simply
A long strangle is similar to a straddle but uses out-of-the-money options — the call strike is above the current price and the put strike is below it. This makes strangles cheaper than straddles, but the stock needs to move further to profit. Short strangles (selling both sides) collect premium and profit when the stock stays between the two strikes. Short strangles are higher risk because they have unlimited loss potential on the call side.
How Tradewink Uses Strangle
Short strangles are recommended by the AI when IV rank is elevated (>50) and the stock has low expected movement. The AI selects strikes at specific delta levels (typically 0.16 delta for ~84% probability of profit). Long strangles are used as cheaper alternatives to straddles for earnings plays when the AI expects a large but uncertain directional move.
Related Terms
See Strangle in action
Tradewink uses strangle as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.