What is a short strangle option strategy?
A) A short call option + long put option with a higher strike price than the call option
B) A long call option + long put option with a lower strike price than the call option
C) A short call option + short put option with a lower strike price than the call option
D) A long call option + long put option with higher strike price than the call option

Question

Quizplus · Accepted Answer

A short strangle option strategy involves selling both a call and put option with a lower strike price than the current market price, typically with the expectation that the underlying asset will remain within a certain price range. This results in a limited profit potential but a higher probability of success compared to other option strategies. Option A and D involve long options, while option B involves purchasing options with a higher strike price, which does not match the description of a short strangle.

What Is a Short Strangle Option Strategy