The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “What is the difference between a strangle and a straddle?” The difference between these two option strategies is actually very simple because they’re cousins of one another. The difference is that with a straddle, you are selling the at the money call option and the at the money put option effectively at the same price. If you have a stock that’s trading at $100, to do the straddle, you would sell the 100 strike call and the 100 strike put. A strangle is selling any other combination of out of the money options that are not at the same price or strike price. For example, if the stock is trading at $100, you might sell the 101 call option and the 99 put option. That would create a strangle. You could also sell the 99 put option and the 105 call option. Again, that could also create a strangle. The strangle is just simply selling options on both ends, so the put side and