strangles

A strangle is an options trading strategy where an investor simultaneously buys a call and a put option at different strike prices, both with the same expiration date. This setup allows the trader to profit if the underlying asset makes a significant move either upward or downward, as the gains from one option can offset the loss on the other. The risk is limited to the total premium paid for both options. Strangles are typically used when an investor expects high volatility but is uncertain about the direction of the price movement.