Short Strangle Calculator

By Dennis Bosmans · Updated June 2026 · 2 min read · Risk disclaimer

A short strangle sells an out-of-the-money call and an out-of-the-money put. It is the wider, lower-premium cousin of the short straddle: you collect less, but the stock has a bigger range to stay in before you lose. The risk is still effectively unlimited on a large move.

Interactive calculator

Edit the price, strikes and premiums to see the payoff update live.

Underlying price

tool_shortCALLStrike Premium

tool_shortPUTStrike Premium

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Key characteristics

Sell an OTM call + OTM put: a wide profit zone between the two strikes.
Max profit = the premium collected, kept if the stock stays between the strikes.
Lower premium than a short straddle, but a larger margin for the stock to move.
Short-volatility income; risk is unlimited beyond the breakevens.

When to use a short strangle

Sell a strangle when you expect the stock to stay range-bound and want a comfortable buffer on both sides. Because the strikes are out of the money, the stock can drift around without threatening the position — you win as long as it stays between the short put and short call by expiration.

It is a favourite premium-selling income trade because the wide breakevens give a high probability of profit. The price of that comfort is a smaller credit than a short straddle.

Managing the risk

The wider strikes reduce — but do not remove — the danger: a sharp move past either breakeven still produces unlimited (call side) or very large (put side) losses. The premium is a thin cushion against a true outlier move or gap.

Defined-risk traders run an iron condor instead — the same shape but with long wings that cap the loss. You collect less, but you can never be hurt by a runaway move.

Worked example. A stock trades at $100. You sell the $108 call for $1.50 and the $92 put for $1.50, collecting $300. As long as the stock finishes between $92 and $108 you keep some or all of it; your breakevens are $89 and $111. A move to $125, though, would cost far more than the $300 you took in.

Calculate it live

Use the free OptionProfit Short Strangle calculator to load a live option chain, build the trade, and instantly see the payoff chart, breakevens, probability of profit, Greeks and a Monte Carlo simulation of outcomes.

Key takeaways

Sell an OTM call + OTM put for a wide range-bound profit zone.
Lower premium than a short straddle, but more room for the stock to wander.
Max profit = the premium; high probability, but unlimited tail risk remains.
The iron condor is the defined-risk version (long wings cap the loss).

Frequently asked questions

Short strangle vs short straddle — which is safer?

The strangle is safer in the sense that its breakevens are wider, so the stock can move more before you lose. But you collect less premium, and both carry unlimited tail risk on a large move.

What is the probability of profit on a short strangle?

It is usually high because the profit zone is wide, but that is balanced by a small reward and a rare-but-large potential loss. The math rewards consistency and punishes the occasional outlier.

How do I cap the risk?

Turn it into an iron condor by buying a further-out call and put as wings. That defines the maximum loss in exchange for a smaller credit.

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