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Short strangle calculator
collect twice, defend twice

A short strangle sells an out-of-the-money call and an out-of-the-money put, collecting both premiums. It pays in full whenever the underlying finishes anywhere between the two strikes, which is most of the time — and that high hit rate is precisely what makes it dangerous. The profit is capped at the credit; the loss above the call strike is not capped at all.

Outlook: Neutral — expecting a quiet range

Max profit

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best case at expiry

Max loss

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worst case at expiry

Breakeven

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where the trade turns even

Net debit / credit

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to open the position

Your short strangle

Per-share premiums. One contract = 100 shares.

Underlying price

Short call @ strike

Premium collected

Short put @ strike

Premium collected

Contracts

100 shares per contract

Profit at expiry Loss at expiry Breakeven Strikes & spot

How a short strangle pays

Total credit = call premium + put premium Max profit = total credit x 100 x contracts (between the strikes) Upper breakeven = short call strike + total credit Lower breakeven = short put strike - total credit Max loss = unlimited above the call; strike - credit below the put

Wins often, loses big. Finishing between the strikes is the common case, so a run of winners tells you nothing about whether the size is safe.
Short vega and short gamma. A volatility spike hurts both legs at once, and the position gets shorter into a move rather than flatter.
Undefined risk on the call side. There is no upper bound. Brokers price the margin accordingly, and a gap through the strike does not wait for you to react.
Time decay is the whole thesis. Every quiet day pays. That is the entire edge, and it is why the trade needs a range, not a direction.

Worth naming. This is the position that ends accounts. Selling premium feels like income right up to the session where it is not: the loss beyond the call strike has no ceiling, assignment can arrive early on either leg, and margin requirements expand exactly when the trade is going against you. Size it by what the worst plausible gap costs, never by the credit collected. Defined-risk versions of the same view - an iron condor, or a credit spread on one side - cap the tail for part of the premium.

What this does not model

Every figure here is the payoff at expiry. Before then your position is marked at market prices that still carry time value, so a trade can show a loss while sitting exactly where you wanted it — falling implied volatility alone will do that.

Short legs carry assignment risk. American-style options can be exercised at any time, most commonly on in-the-money calls just before an ex-dividend date. The diagram assumes you hold every leg to expiry.

For the live version — real Greeks, current marks and what-if scenarios against actual chain data — that is what the GreeksView desk does, in your browser, on your own broker keys.

Frequently asked questions

What are the breakevens on a short strangle?

Two: the call strike plus the total credit, and the put strike minus it. Selling a 105 call at $2.20 and a 95 put at $2.00 collects $4.20, so the trade is profitable between $90.80 and $109.20 at expiry.

How is a short strangle different from an iron condor?

An iron condor is a short strangle with protective wings bought further out. The condor collects less premium but has a defined maximum loss; the strangle keeps the whole credit and keeps the whole tail.

What happens if only one side goes in the money?

The untouched side expires worthless and you keep its premium, which offsets part of the loss on the tested side. That offset is why the breakevens sit further out than the strikes themselves.

Why does implied volatility matter so much here?

You are short vega on both legs, so the position loses value when IV rises even if price has not moved. Sellers generally want to open when IV rank is high and falling, not when it is low.

Are commissions included in these numbers?

No — every figure is gross. On multi-leg positions this matters more than people expect: four legs to open and four to close is eight commissions against what may be a couple of hundred dollars of credit. Check your broker's per-contract rate against the max profit shown here before deciding a trade is worth putting on.

Run this against a live chain

GreeksView builds positions from real option chains with live Greeks, gamma exposure and what-if scenarios — in your browser, on your own broker keys.

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