Long Straddle (Buy Straddle) Vs Long Strangle (Buy Strangle) Options Trading Strategy Comparison

Compare Long Straddle (Buy Straddle) and Long Strangle (Buy Strangle) options trading strategies. Find similarities and differences between Long Straddle (Buy Straddle) and Long Strangle (Buy Strangle) strategies. Find the best options trading strategy for your trading needs.

Long Straddle (Buy Straddle) Vs Long Strangle (Buy Strangle)

	Long Straddle (Buy Straddle)	Long Strangle (Buy Strangle)


About Strategy	The Long Straddle (or Buy Straddle) is a neutral strategy. This strategy involves simultaneously buying a call and a put option of the same underlying asset, same strike price and same expire date. A Long Straddle strategy is used in case of highly volatile market scenarios wherein you expect a big movement in the price of the underlying but are not sure of the direction. Such scenarios arise when company declare results, budget, war-like situation etc. This is an unlimited profit and limited risk strategy. The profit earns in this strategy is unlimited. Higher volatility results in higher profits. The maximum loss is limited to the net premium paid. The max loss occurs when underlying asset price on expire remains at the strike price. ... Read More	The Long Strangle (or Buy Strangle or Option Strangle) is a neutral strategy wherein Slightly OTM Put Options and Slightly OTM Call are bought simultaneously with same underlying asset and expiry date. This strategy can be used when the trader expects that the underlying stock will experience significant volatility in the near term. It is a limited risk and unlimited reward strategy. The maximum loss is the net premium paid while maximum profit is achieved when the underlying moves either significantly upwards or downwards at expiration. The usual Long Strangle Strategy looks like as below for NIFTY current index value at 10400 (NIFTY Spot Price): Options Strangle Orders OrdersNIFTY Strike Price Buy 1 Slightly OTM PutN... Read More
Market View	Neutral	Neutral
Strategy Level	Beginners	Beginners
Options Type	Call + Put	Call + Put
Number of Positions	2	2
Risk Profile	Limited	Limited
Reward Profile	Unlimited	Unlimited
Breakeven Point	2 break-even points	two break-even points

When and how to use Long Straddle (Buy Straddle) and Long Strangle (Buy Strangle)?

	Long Straddle (Buy Straddle)	Long Strangle (Buy Strangle)
When to use?	The strategy is perfect to use when there is market volatility expected due to results, elections, budget, policy change, war etc.	A Long Strangle is meant for special scenarios where you foresee a lot of volatility in the market due to election results, budget, policy change, annual result announcements etc.
Market View	Neutral When you are not sure on the direction the underlying would move but are expecting the rise in its volatility.	Neutral When you are unsure of the direction of the underlying but expecting high volatility in it.
Action	Buy Call Option Buy Put Option	Buy OTM Call Option Buy OTM Put Option Suppose Nifty is currently at 10400 and you expect the price to move sharply but are unsure about the direction. In such a scenario, you can execute long strangle strategy by buying Nifty at 10600 and at 10800. The net premium paid will be your maximum loss while the profit will depend on how high or low the index moves.
Breakeven Point	2 break-even points A straddle has two break-even points. Lower Breakeven = Strike Price of Put - Net Premium Upper breakeven = Strike Price of Call + Net Premium	two break-even points A Options Strangle strategy has two break-even points. Lower Breakeven Point = Strike Price of Put - Net Premium Upper Breakeven Point = Strike Price of Call + Net Premium

Compare Risks and Rewards (Long Straddle (Buy Straddle) Vs Long Strangle (Buy Strangle))

	Long Straddle (Buy Straddle)	Long Strangle (Buy Strangle)
Risks	Limited The maximum loss for long straddle strategy is limited to the net premium paid. It happens the price of underlying is equal to strike price of options. Maximum Loss = Net Premium Paid	Limited Max Loss = Net Premium Paid The maximum loss is limited to the net premium paid in the long strangle strategy. It occurs when the price of the underlying is trading between the strike price of Options.
Rewards	Unlimited There is unlimited profit opportunity in this strategy irrespective of the direction of the underlying. Profit occurs when the price of the underlying is greater than strike price of long Put or lesser than strike price of long Call.	Unlimited Maximum profit is achieved when the underlying moves significantly up and down at expiration. Profit = Price of Underlying - Strike Price of Long Call - Net Premium Paid Or Profit = Strike Price of Long Put - Price of Underlying - Net Premium Paid
Maximum Profit Scenario	Max profit is achieved when at one option is exercised.	One Option exercised
Maximum Loss Scenario	When both options are not exercised. This happens when underlying asset price on expire remains at the strike price.	Both Option not exercised

Pros & Cons or Long Straddle (Buy Straddle) and Long Strangle (Buy Strangle)

	Long Straddle (Buy Straddle)	Long Strangle (Buy Strangle)
Advantages	Earns you unlimited profit in a volatile market while minimizing the loss.
Disadvantage	The price change has to be bigger to make good profits.	The strategy requires significant price movements in the underlying to gain profits.
Simillar Strategies	Long Strangle, Short Straddle	Long Straddle, Short Strangle

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