Tuesday, November 25, 2008

Stock Option Terms: Strangle

Strangle:
A neutral trade that involves buying both a call and a put at the same strike price and with the same expiration date. This option trade is essentially a bet that the price will move dramatically in one direction or the other. If the stock does not move dramatically, the purchaser of the strangle will be out the cost of buying the options less any amount the stock remains in the money.

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