Calls and puts can be some of the most effective investment strategies available. However, managing options can be a little tricky for the novice trader. If you don't fully understand how they work, you can lose a lot of money. Two of the most important strategies you'll need to understand are straddle options and strangle options. This guide will explain the difference between straddle and strangle options and help you figure out the best choice for your situation.
- Straddle options are a type of investment strategy that involves working simultaneously with a call and put that have the same expiration date and strike price.
- Strangle options are an investing strategy that involves managing call and put options with different strike prices and the same expiration date. In a strangle, the options are both out-of-the-money, so they're cheaper, but less likely to reach their strike prices.
What Are Straddle Options?
Straddle options are a type of investment strategy that involves working simultaneously with a call and put that have the same expiration date and the same strike price. They're a type of spread combination that helps to reduce the maximum risk for an investor.