Strangles

​

A long strangle involves the simultaneous purchase of a (lower strike) put and a different strike call (with a higher strike). The same number of underlying units and expiration are common to the two options being purchased.

 

As straddles, strangles are outright bets on volatility. The difference with straddles is the use of different strikes.

 

Strangles structured with both strikes out of the money will have a lower added premium that an at the money straddle for the same expiration.