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 answer the question – “What is a long strangle?” A long strangle option strategy is again, an aggressive option buying strategy whereby you are purchasing option contracts on either end of where the stock is trading currently. For example, if a stock is trading at say $100, you might purchase the 105 call option and the 95 strike put option. Now, this creates that straddle payoff diagram which is basically a very aggressive option buying strategy in which you are looking for the stock to make a large move in either direction. Now, because you’re not buying options at the exact same strike price, you do have the ability with a long strangle to be fluid with your option strikes and purchase option contracts either far out of the money or close to at the money, depending on how aggressive you want to be with your strategy and how far you think the underlying stock is going to move. Now, all this bein