Strangle Calculator
Calculate the cost, breakeven points, and profit potential of a long strangle. Enter the OTM call and put strikes with their premiums to see how far the stock needs to move for the trade to profit.
Enter your strike prices and premiums, then click Calculate to see your long strangle cost, breakeven points, and profit potential.
For educational purposes only. Not financial advice. Read full disclaimer
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Long Strangle Formulas
Total Cost = (Call Premium + Put Premium) × 100 × Contracts
Max Loss = Total Cost (if stock expires between strikes)
Breakeven Upper = Call Strike + Call Premium + Put Premium
Breakeven Lower = Put Strike − Call Premium − Put Premium
Max Profit (Upside) = Unlimited
Max Profit (Downside) = (Put Strike − Total Premium per Share) × 100 × Contracts
Worked Examples
Example 1: TSLA Earnings Strangle
You buy 1 TSLA $260 call for $4.00 and 1 TSLA $240 put for $3.50 before earnings.
- Total Cost = ($4.00 + $3.50) × 100 = $750
- Max Loss = $750 (if TSLA expires between $240 and $260)
- Breakeven Upper = $260 + $7.50 = $267.50
- Breakeven Lower = $240 − $7.50 = $232.50
- Breakeven Width = $267.50 − $232.50 = $35.00
Example 2: SPY Strangle (2 Contracts)
You buy 2 SPY $460 calls for $5.00 and 2 SPY $440 puts for $4.00.
- Total Cost = ($5.00 + $4.00) × 100 × 2 = $1,800
- Max Loss = $1,800 (if SPY expires between $440 and $460)
- Breakeven Upper = $460 + $9.00 = $469.00
- Breakeven Lower = $440 − $9.00 = $431.00
- Breakeven Width = $469 − $431 = $38.00
How to Use This Calculator
- Enter the call strike price — the out-of-the-money call strike above the current stock price.
- Enter the put strike price — the out-of-the-money put strike below the current stock price.
- Enter the call premium — the per-share price of the OTM call option you are buying.
- Enter the put premium — the per-share price of the OTM put option you are buying.
- Click Calculate — review the total cost, breakeven points, and profit potential to decide if the expected move justifies the premium.
Frequently Asked Questions
- When should I use a long strangle instead of a straddle?
- A long strangle is cheaper than a straddle because you buy out-of-the-money options instead of at-the-money. Use a strangle when you expect a large move but want to reduce your upfront cost. The tradeoff is wider breakeven points — the stock needs to move further for the trade to profit. Strangles are common before earnings or major catalysts when premiums are expensive.
- How does implied volatility affect a strangle?
- Implied volatility directly impacts strangle pricing. High IV means expensive premiums, making the strangle costlier and harder to profit from. Ideally, you buy strangles when IV is low and expect it to rise (or the stock to move significantly). A post-event IV crush can hurt a strangle even if the stock moves in your favor, because both options lose volatility value.
- What is the maximum loss on a long strangle?
- The maximum loss is the total premium paid for both options. This occurs if the stock price expires between the two strike prices at expiration — both options expire worthless. Unlike short strangles, a long strangle has defined risk limited to the initial debit.
- How are strangle breakeven points calculated?
- The upper breakeven equals the call strike plus the total premium paid (call + put). The lower breakeven equals the put strike minus the total premium paid. The stock must close above the upper breakeven or below the lower breakeven at expiration for the trade to be profitable.
- How wide should I set my strangle strikes?
- Strike width involves a cost-vs-probability tradeoff. Wider strikes (further OTM) cost less but need a bigger move to profit. Narrower strikes cost more but have tighter breakeven points. Many traders set strikes at one standard deviation from the current price, or align them with the expected move. Use the expected move calculator to help decide.