Value-Trades

Short Strangle Strategy: Real Trade Example


Real Example (July 2025)

A short strangle involves selling a call and a put with different strike prices but the same expiration. It's used by traders who expect low volatility and want to profit from time decay.
  • Stock: XYZ Corp
  • Outlook: Expecting minimal movement
  • Setup: Sell 1 XYZ $105 Call @ $2.50; Sell 1 XYZ $95 Put @ $2.00
  • Total Credit: $4.50 ($450 per contract)
  • Max Gain: $450
  • Max Loss: Unlimited (upside) or substantial (downside)
  • Breakeven: $109.50 (upside) and $90.50 (downside)

Outcomes

Stock Price at Expiration Call Loss Put Loss Total Loss Net P/L
$85 $0 $10 $10 -$550
$100 $0 $0 $0 +$450
$115 $10 $0 $10 -$550

Compare With Short Straddle Strategy →

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