1c274f894bf9
Main

Long Strangle | PFG Futures

back-2624470
Long Strangle

Class: Precision

Synthetics: Long put A, Long call A. Long call A, long put B Long put A, Long put B Long instrument Long call A, Long call B, Short instrument

(All done to initial delta neutrality)

Long Strangle | PFG Futures

When to use:

If market is within or near A-B range and has been stagnant.

If market explodes either way, you make money; if market

continues to stagnate, you lose less than with a long

straddle

Profit Characteristics:

Profit open – ended in either direction. With put A vs. call

B version ( most common), break – even are at A minus

cost of spread. However, spread is usually not held to expiration.

Loss Characteristics:

loss limited most common version, loss is equal to net cost of

position. Maximum loss incurred if, at expiration, market is

between A and B.

Decay Characteristics:

Decay accelerates as options approach expiration but not

as rapidly as with long straddle. To avoid largest part of

decay, the position is normally taken off prior to expiration.

See also  Contact Specifications | Trade Futures