The Strangle Calculator can be used to chart theoretical profit and loss (P&L) for strangle positions. Clicking on the chart icon on the Strangle Screener loads the calculator with a selected strangle position.
A strangle consists of a call and a put with different strikes. They are either both long or both short. A long strangle profits when the underlying security moves in either direction, but the move must be significant. A short strangle profits when the underlying security stays relatively stable.
A strangle differs from a s straddle because the strikes are different. A long strangle with a wide spread between the strikes is cheaper than a straddle, but a larger movement in the underlying security is required before the position is profitable. Conversely, a short strangle will be profitable over a wider range of movement on the underlying stock price than a straddle, but the maximum profit is also less.
The black line shows the P&L, which is the sum of the P&L for the call and put positions. The green triangle displays the approximate break-even point. General Help with the calculator can be found here.