Short Strangle

Short Strangle is an Options trading strategy where an investor sells (writes) both a call option and a put option on the same underlying Asset with different Strike Prices but the same expiration date. This strategy profits from low volatility in the underlying Asset’s price, as it relies on the Options expiring worthless.

Examples:

• If a Stock is trading at $50, a trader might sell a call option with a Strike Price of $55 and a put option with a Strike Price of $45.
• The trader collects premiums from both Options, and if the Stock price remains between $45 and $55 at expiration, both Options expire worthless, allowing the trader to keep the premiums.

Cases:

• Case 1: Stock price remains stable at $50