A long strangle loses its premium between two strikes and gains only beyond wider breakevens
Take the NIFTY chain of 10 Jun 2026, expiry 30 Jun 2026. A straddle buys the call and the put at the strike nearest the index. A strangle buys a call above the index and a put below it, so both legs start out of the money. Both are two legs on one expiry.
The straddle costs more, because both legs sit where time value is largest. The strangle costs less, so it loses less if the index stays near where it is. Its breakevens sit a little further out than the straddle's, so the index has to travel slightly further before the buyer gains.
The chart shows a long strangle, one lot, at expiry, on the 10 Jun 2026 settle prices. Between the two strikes the loss is the whole premium, and beyond each breakeven the gain grows with every point. A straddle at the money has a V shape instead of a flat bottom, with a higher premium and breakevens a little closer in.
Sellers face the mirror image. A short strangle keeps the premium inside its breakevens and loses beyond them, with no cap on the call side. A short straddle peaks at one strike instead of a flat top, with a larger premium and a slightly narrower profit zone. The payoff, not the name, decides the risk.
Implied volatility sets how big a move the option prices already allow for. A strangle is cheaper because its strikes are less likely to be reached, so the lower price buys a lower chance of a payout. Read the breakevens first, then the cost.
Before you trade. Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. Read the SEBI study