{"id":175935,"date":"2021-03-02T19:19:00","date_gmt":"2021-03-03T00:19:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/trading-lessons\/neutral-market-short-strangle\/"},"modified":"2025-10-15T14:58:16","modified_gmt":"2025-10-15T18:58:16","slug":"neutral-market-short-strangle","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/neutral-market-short-strangle\/","title":{"rendered":"Neutral Market \u2013 Short Strangle"},"content":{"rendered":"<p>The short strangle is similar to the short straddle, though the strikes of the options differ. This is also a trade that benefits from decay and decreased volatility regardless of direction.\u00a0 Because the strike prices involved are further apart than a short straddle, there is a lower risk that this trade will cause the investor to face a loss. The lower associated risk means that the investor receives a lower premium at the outset for making the trade.\u00a0 As with a short straddle, profit is capped to the initial premium while loss is potentially unlimited.\u00a0 The short strangle makes maximum profits between the two strike prices and has two breakeven points. To the downside, the trade makes money if the stock stays above the lower strike price of the put minus the sum of the two premiums paid.\u00a0 To the upside the trade makes money if the stock stays below the upper strike price for the call plus the sum of the two premiums paid. Outside of these breakeven points the trade has unlimited loss potential in the event that the share price continues to increase or decrease, though the downside potential loss is limited by the fact that the share price could only fall to a minimum of zero.<\/p>\n<p><strong>Short Strangle example \u2013 <\/strong><\/p>\n<ul>\n<li>Underlying XYZ stock price: $80.00<\/li>\n<li>Call strike price:85.00<\/li>\n<li>Call option premium:$3.00<\/li>\n<li>Put strike price:75.00<\/li>\n<li>Put option premium: $2.50<\/li>\n<li>Days to expiration:90<\/li>\n<li>Upside Breakeven: $85.00+$3.00+$2.50 = $92.50 (Call strike price <em>plus<\/em> premium received for call <em>plus <\/em>premium received for put option)<\/li>\n<li>Downside Breakeven: $75.00-$3.00-$2.50 = $69.50 (Put strike price <em>minus<\/em> premium received for call <em>minus <\/em>premium received for put option)<\/li>\n<li>Profit potential: Limited to the combined premiums from both call and put or $5.50 and occurs at all points between the $75.00 and $85.00 strike prices. Until the upper strike price neither the call nor put has zero intrinsic value. And so, between the strikes, the investor retains both premiums. Below the strike price of the put the value of the combined premium is eaten away, as the intrinsic value of the put option increases. Conversely, above the strike price of the call, that combined premium begins to diminish as the intrinsic value of the call increases.<\/li>\n<li>Potential profit: @$80.00 \u2013 Both put and call options are out-the-money and each has zero value. The investor gets to keep the entire $5.50 premium collected from the sale of each option.<\/li>\n<li>@$60.00 \u2013 The out-the-money call option now has zero intrinsic value. However, the put option is now in-the-money by $15.00 ($75.00 minus $60.00) and this must be subtracted from the combined $5.50 premium, which leaves the investor at a total loss of $9.50 ($15.00 &#8211; $5.50 = $9.50).<\/li>\n<li>Maximum loss: Just like with a short straddle strategy, the short strangle seller faces potentially unlimited losses to the upside, since the intrinsic call value keeps up with the rising share price penny-for-penny. Losses to the downside can be significant as the intrinsic nature of the put option matches the downside performance of the stock penny-for-penny, limited only by a zero value for the underlying share price.<\/li>\n<\/ul>\n<p>Market Outlook &#8211; Neutral<\/p>\n<p>Volatility View &#8211; Decreases premium<\/p>\n<p>Time Erosion &#8211; Reduces premium<\/p>\n<p>Dividends &#8211; Neutral<\/p>\n<p>Interest Rate &#8211; Neutral<\/p>\n<p>Profit Potential &#8211; Limited<\/p>\n<p>Loss Potential &#8211; Substantial from short put\/ unlimited from short call<\/p>\n<p>Components &#8211; Sell lower strike put and higher strike call option with same expiration<\/p>\n<table width=\"631\" style=\"white-space: nowrap;\">\n<tbody>\n<tr>\n<td width=\"89\">Underlying Stock<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0 80.00<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">Underlying Stock<\/td>\n<td width=\"108\">Call P&amp;L<\/td>\n<td width=\"104\">Put P&amp;L<\/td>\n<td width=\"97\">Total P&amp;L<\/td>\n<\/tr>\n<tr>\n<td width=\"89\">Call Strike<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0 85.00<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 10.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (6,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (5,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\">Premium<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0\u00a0\u00a0 3.00<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 15.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (5,750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (5,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\">Put Strikes<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0 75.00<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 20.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (5,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (4,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\">Premium<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0\u00a0\u00a0 2.50<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 25.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (4,750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (4,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\">Net Premium<\/td>\n<td width=\"89\">\u00a0$\u00a0\u00a0\u00a0\u00a0 5.50<\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 30.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (4,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (3,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 35.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (3,750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (3,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (3,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (2,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 45.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (2,750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (2,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 50.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (2,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (1,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 55.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (1,750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (1,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 60.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (1,250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 65.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (750)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 70.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (250)<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 50<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 75.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 550<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 80.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 550<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 85.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 550<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 90.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (200)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 50<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 95.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (700)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 100.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (1,200)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 105.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (1,700)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (1,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 110.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (2,200)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (1,950)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 115.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (2,700)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (2,450)<\/td>\n<\/tr>\n<tr>\n<td width=\"89\"><\/td>\n<td width=\"89\"><\/td>\n<td width=\"16\"><\/td>\n<td width=\"128\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 120.00<\/td>\n<td width=\"108\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 (3,200)<\/td>\n<td width=\"104\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 250<\/td>\n<td width=\"97\">\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0 (2,950)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the stock will remain stuck in a defined range. Because implied volatility is a significant determinant of an option\u2019s premium, investors also try to take advantage of diminishing volatility ahead to sell strangles.<\/p>\n","protected":false},"author":1053,"featured_media":221410,"parent":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"contributors-categories":[13576],"traders-academy":[13126,13128,13132],"class_list":{"0":"post-175935","1":"trading-lessons","2":"type-trading-lessons","3":"status-publish","4":"has-post-thumbnail","6":"contributors-categories-interactive-brokers","7":"traders-academy-intermediate-trading","8":"traders-academy-level","9":"traders-academy-trading-lesson"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Archives | Traders&#039; Academy | IBKR Campus<\/title>\n<meta name=\"description\" content=\"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175935\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Neutral Market \u2013 Short Strangle\" \/>\n<meta property=\"og:description\" content=\"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the stock will remain stuck in a defined range.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/neutral-market-short-strangle\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:modified_time\" content=\"2025-10-15T18:58:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/03\/mqdefault-6.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"320\" \/>\n\t<meta property=\"og:image:height\" content=\"180\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Neutral Market \u2013 Short Strangle\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\n\t    \"@context\": \"https:\\\/\\\/schema.org\",\n\t    \"@graph\": [\n\t        {\n\t            \"@type\": \"WebPage\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/\",\n\t            \"name\": \"Neutral Market \u2013 Short Strangle\",\n\t            \"isPartOf\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#website\"\n\t            },\n\t            \"primaryImageOfPage\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/#primaryimage\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/#primaryimage\"\n\t            },\n\t            \"thumbnailUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2021\\\/03\\\/mqdefault-6.jpg\",\n\t            \"datePublished\": \"2021-03-03T00:19:00+00:00\",\n\t            \"dateModified\": \"2025-10-15T18:58:16+00:00\",\n\t            \"description\": \"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the stock will remain stuck in a defined range.\",\n\t            \"breadcrumb\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/#breadcrumb\"\n\t            },\n\t            \"inLanguage\": \"en-US\",\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"ReadAction\",\n\t                    \"target\": [\n\t                        \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/\"\n\t                    ]\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"ImageObject\",\n\t            \"inLanguage\": \"en-US\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/#primaryimage\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2021\\\/03\\\/mqdefault-6.jpg\",\n\t            \"contentUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2021\\\/03\\\/mqdefault-6.jpg\",\n\t            \"width\": 320,\n\t            \"height\": 180,\n\t            \"caption\": \"Neutral Market \u2013 Short Strangle\"\n\t        },\n\t        {\n\t            \"@type\": \"BreadcrumbList\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/neutral-market-short-strangle\\\/#breadcrumb\",\n\t            \"itemListElement\": [\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 1,\n\t                    \"name\": \"Academy Lessons\",\n\t                    \"item\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/\"\n\t                },\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 2,\n\t                    \"name\": \"Neutral Market \u2013 Short Strangle\"\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"WebSite\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#website\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/\",\n\t            \"name\": \"IBKR Campus US\",\n\t            \"description\": \"Financial Education from Interactive Brokers\",\n\t            \"publisher\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#organization\"\n\t            },\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"SearchAction\",\n\t                    \"target\": {\n\t                        \"@type\": \"EntryPoint\",\n\t                        \"urlTemplate\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/?s={search_term_string}\"\n\t                    },\n\t                    \"query-input\": {\n\t                        \"@type\": \"PropertyValueSpecification\",\n\t                        \"valueRequired\": true,\n\t                        \"valueName\": \"search_term_string\"\n\t                    }\n\t                }\n\t            ],\n\t            \"inLanguage\": \"en-US\"\n\t        },\n\t        {\n\t            \"@type\": \"Organization\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#organization\",\n\t            \"name\": \"Interactive Brokers\",\n\t            \"alternateName\": \"IBKR\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/\",\n\t            \"logo\": {\n\t                \"@type\": \"ImageObject\",\n\t                \"inLanguage\": \"en-US\",\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#\\\/schema\\\/logo\\\/image\\\/\",\n\t                \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2024\\\/05\\\/ibkr-campus-logo.jpg\",\n\t                \"contentUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2024\\\/05\\\/ibkr-campus-logo.jpg\",\n\t                \"width\": 669,\n\t                \"height\": 669,\n\t                \"caption\": \"Interactive Brokers\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#\\\/schema\\\/logo\\\/image\\\/\"\n\t            },\n\t            \"publishingPrinciples\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/about-ibkr-campus\\\/\",\n\t            \"ethicsPolicy\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/cyber-security-notice\\\/\"\n\t        }\n\t    ]\n\t}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Archives | Traders' Academy | IBKR Campus","description":"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175935\/","og_locale":"en_US","og_type":"article","og_title":"Neutral Market \u2013 Short Strangle","og_description":"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the stock will remain stuck in a defined range.","og_url":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/neutral-market-short-strangle\/","og_site_name":"IBKR Campus US","article_modified_time":"2025-10-15T18:58:16+00:00","og_image":[{"width":320,"height":180,"url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/03\/mqdefault-6.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_title":"Neutral Market \u2013 Short Strangle","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/","url":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/","name":"Neutral Market \u2013 Short Strangle","isPartOf":{"@id":"https:\/\/ibkrcampus.com\/campus\/#website"},"primaryImageOfPage":{"@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/#primaryimage"},"image":{"@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/#primaryimage"},"thumbnailUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/03\/mqdefault-6.jpg","datePublished":"2021-03-03T00:19:00+00:00","dateModified":"2025-10-15T18:58:16+00:00","description":"When neutral on the outlook for a stock, an investor might wish to generate income by selling different strike call and put options hoping that the stock will remain stuck in a defined range.","breadcrumb":{"@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/#primaryimage","url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/03\/mqdefault-6.jpg","contentUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2021\/03\/mqdefault-6.jpg","width":320,"height":180,"caption":"Neutral Market \u2013 Short Strangle"},{"@type":"BreadcrumbList","@id":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/neutral-market-short-strangle\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Academy Lessons","item":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/"},{"@type":"ListItem","position":2,"name":"Neutral Market \u2013 Short Strangle"}]},{"@type":"WebSite","@id":"https:\/\/ibkrcampus.com\/campus\/#website","url":"https:\/\/ibkrcampus.com\/campus\/","name":"IBKR Campus US","description":"Financial Education from Interactive Brokers","publisher":{"@id":"https:\/\/ibkrcampus.com\/campus\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ibkrcampus.com\/campus\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ibkrcampus.com\/campus\/#organization","name":"Interactive Brokers","alternateName":"IBKR","url":"https:\/\/ibkrcampus.com\/campus\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ibkrcampus.com\/campus\/#\/schema\/logo\/image\/","url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/05\/ibkr-campus-logo.jpg","contentUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/05\/ibkr-campus-logo.jpg","width":669,"height":669,"caption":"Interactive Brokers"},"image":{"@id":"https:\/\/ibkrcampus.com\/campus\/#\/schema\/logo\/image\/"},"publishingPrinciples":"https:\/\/www.interactivebrokers.com\/campus\/about-ibkr-campus\/","ethicsPolicy":"https:\/\/www.interactivebrokers.com\/campus\/cyber-security-notice\/"}]}},"_links":{"self":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons"}],"about":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/types\/trading-lessons"}],"author":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/users\/1053"}],"replies":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/comments?post=175935"}],"version-history":[{"count":0,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175935\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media\/221410"}],"wp:attachment":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media?parent=175935"}],"wp:term":[{"taxonomy":"contributors-categories","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/contributors-categories?post=175935"},{"taxonomy":"traders-academy","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/traders-academy?post=175935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}