Short Strangle Calculator
A short strangle sells an out-of-the-money call and put, keeping the full credit if the underlying stays between the strikes. The profit band is wider than a short straddle's, the credit smaller, and the upside loss still unlimited.
The arithmetic
The default sells the $105 call and $95 put for $2.20 each — $440 credit per strangle.
- Max profit = the credit, $440, kept in full anywhere between $95 and $105.
- Breakevens = $90.60 and $109.40 — a 19% wide profit band.
- Max loss = unlimited above; $9,060 if the underlying goes to zero.
Compared with the short straddle
The short straddle collects $700 with breakevens at $93 and $107. This collects $440 with breakevens at $90.60 and $109.40. You give up 37% of the credit to widen the band by about 40%. For most underlyings that is a better trade, which is why short strangles are far more common than short straddles in practice.
The tail is identical in kind, though. Both are unlimited above. A wider band changes how often you get hurt, not how badly.
Strike selection is the entire strategy
There is no skill in collecting a credit — anyone can sell options. The skill, if it exists, is in choosing strikes the underlying will not reach, repeatedly, at prices that pay for the times it does. That is a testable claim, and it is testable only against a full record of every strangle opened, with strikes and credit logged before the fact. A memory of the months that expired worthless is not evidence.
Defined-risk alternative
Buy wings outside both short strikes and the position becomes an iron condor: less credit, same profit band, and a fixed maximum loss instead of an open tail. For anyone who cannot absorb a gap, that trade-off is not optional.
Where the 100x multiplier comes from
Product specification, not convention: OCC defines a standard equity option as covering 100 shares, premium quoted in points where one point is $100[1] — so a $1.85 premium costs $185, and every payoff here applies that multiplier to the leg structure.
One exception is worth knowing about: adjusted contracts, covered on the options profit calculator.
Calculating it is the easy half
Selling a strangle takes seconds. The payoff is arithmetic — anyone can run it. What it cannot show is whether you believed the trade when you put it on, or are describing a winner picked out of a month of noise.
That is the gap kappi closes: the position committed before the fact, sealed and timestamped on a log nobody can edit afterwards. A screenshot of this chart proves you can use a calculator; a sealed commit proves you took the trade. $15/month, no free tier.
Sources
Frequently asked questions
What is the maximum loss on a short strangle?
Unlimited on the upside, since no long call caps it. On the downside it is the put strike minus the credit, times 100, if the underlying goes to zero.
What is the profit band on a short strangle?
Between the two breakevens: the put strike minus the credit, and the call strike plus it. In the default that is $90.60 to $109.40.
Short strangle or short straddle?
The strangle collects less credit across a wider band. For most underlyings that is the better trade, but both carry the same unlimited upside risk.
How do I cap the risk on a short strangle?
Buy a further out-of-the-money call and put as wings. That converts it into an iron condor with a fixed maximum loss.