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# Option Strangle Calculator Online

Welcome to our comprehensive guide on the Option Strangle Calculator. This powerful tool helps investors like you optimize trading strategies, specifically option strangles, leading to more profitable decisions.

## Definition of Option Strangle

An Option Strangle is a sophisticated investment strategy involving the simultaneous purchase of both call and put options with the same expiry date but different strike prices. It’s an approach taken when an investor expects a significant price swing in a stock but is unsure of the direction.

## Detailed Explanation of the Option Strangle Calculator’s Working

Our Option Strangle Calculator simplifies the process of calculating breakeven points and potential profit or loss in an option strangle strategy. By simply inputting the strike prices of the call and put options, along with the net premium paid, the calculator outputs the upper and lower breakeven points swiftly.

## The Option Strangle Formula and Variable Description

The calculator uses the following formulas:

• Upper Breakeven Point (UBEP) = Strike Price of the Call Option + Net Premium Paid
• Lower Breakeven Point (LBEP) = Strike Price of the Put Option – Net Premium Paid

Here, the strike price is the set price at which the option can be bought or sold. The net premium paid is the combined cost of the call and put options.

## Example of an Option Strangle Calculation

Let’s say you purchase a call option with a strike price of \$105 and a put option with a strike price of \$95, with a combined net premium of \$10. The UBEP would be \$115 (\$105 + \$10), and the LBEP would be \$85 (\$95 – \$10). These represent your breakeven points.

## Applications of the Option Strangle Strategy

### Hedging

The option strangle strategy is often used for hedging purposes. It provides a safety net for investors during periods of market uncertainty, potentially offsetting losses from other investments.

### Speculation

Speculators often utilize option strangles to profit from anticipated price volatility. It allows them to benefit from significant price movements in either direction.