Multi-leg strategies
What is a Long Strangle and how does it offer a cheaper alternative to the Long Straddle strategy?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A Long Strangle buys an OTM call and OTM put at different strikes, costing less than a straddle but requiring a larger underlying move to reach breakeven.
How it works
The wider breakeven range reflects the lower premium paid for out-of-the-money contracts, trading some probability of profit for reduced upfront cost compared to at-the-money straddles.
An example
Buy a 105 call and a 95 put for $3 total premium; the stock must move above $108 or below $92 to be profitable at expiration.
Risk & limitations
Lower cost does not mean lower risk relative to probability; many strangles expire worthless if the move isn't large enough, and both legs decay with time.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.