Sometimes, you just know the market is about to go crazy. Maybe there is a huge government announcement, a big court verdict, or a major company's yearly results coming up. You know the stock price will jump 5% or 10%, but you have no idea if it will jump up or down. The Long Strangle is the perfect tool for this moment. It allows you to place a bet on both sides at the same time for a relatively low cost. In 2026, it remains one of the most popular ways for retail traders to handle major news events without having to pick a side.

What is a Long Strangle?

A Long Strangle is a strategy where you buy two different Out-of-the-Money (OTM) options at the same time:

Buy a Call Option: This is your bet that the price will go way up.
Buy a Put Option: This is your bet that the price will go way down.

Both options must have the same Expiry Date. Because you are buying OTM options (which are cheaper), this strategy costs less money than its cousin, the Long Straddle.

How it Works: The Simple Math

Imagine a stock is currently trading at ₹1,000.

You buy a ₹1,050 Call for ₹10.
You buy a ₹950 Put for ₹10.
Total Cost (Max Risk): ₹20.

To make a profit, the stock needs to move past your Breakeven Points before the expiry date.

Scenario

What happens to your money

Stock stays at ₹1,000

Both options become worthless. You lose your ₹20.

Stock jumps to ₹1,100

Your Call is worth ₹50. Your Put is ₹0. Total profit = ₹30.

Stock crashes to ₹900

Your Put is worth ₹50. Your Call is ₹0. Total profit = ₹30.

The Breakeven Formula:

Upper Breakeven: Higher Strike Price + Total Premium Paid (e.g., 1,050 + 20 = 1,070)
Lower Breakeven: Lower Strike Price - Total Premium Paid (e.g., 950 - 20 = 930)

Benefits of Using a Long Strangle

No Directional Bias: You don't need to be a fortune teller. You win as long as the market moves somewhere fast.
Low Cost: Because you are buying OTM options, it is much cheaper than buying At-the-Money options.
Limited Risk: You can never lose more than the premium you paid. Even if the market goes to zero or triples in price, your loss is capped.
Unlimited Reward: There is no limit to how much you can earn if the stock makes a massive moonshot or a total crash.

How to Use it in 2026

To be successful with a Long Strangle, timing is everything.

The Event Strategy: Enter the trade 2–3 days before a known event (like an Earnings Report or an RBI Meeting).
Buy Low Volatility: The best time to buy a Strangle is when the market is too quiet. When everyone is bored, premiums are cheap. When the storm hits, premiums explode.
Exit Early: You don't have to wait until expiry! If the market jumps 5% on Monday, you can sell both options and take your profit immediately.

Conclusion

The Long Strangle is the ultimate uncertainty strategy for 2026. It protects you from being wrong about the direction while giving you a chance to profit from high volatility. It is a low-cost way to stay in the game during big news events. However, remember that Time is your enemy. If the market stays flat, your options will lose value every day. Use this strategy only when you are certain that a big move is coming even if you don't know where it's going!

Frequently Asked Questions (FAQs)

What is the difference between a Strangle and a Straddle?

A Straddle uses the same strike price (more expensive, needs a smaller move). A Strangle uses different strike prices (cheaper but needs a bigger move to profit).

Is it true that 90% of Strangles lose money?

If you trade them during boring times, yes. Strangles lose money to Theta (Time Decay) if the big move doesn't happen quickly enough.

What is the Nifty Lot Size for this in 2026?

As of January 2026, the Nifty lot size is 65 and the Bank Nifty lot size is 30. Always check these numbers before calculating your total cost.

When should I close a Long Strangle?

Most experts suggest closing as soon as you see a 20-30% profit, or immediately after the event (like an earnings announcement) is over.

What is IV Crush?

This is a danger for Strangle buyers. After a big event, fear disappears and option prices crash instantly. This can make your trade a loser even if the stock moved a little.

Can I use this for Intraday trading?

Yes. Many traders use strangles on Expiry Days (Thursdays) to catch the wild swings that often happen in the afternoon.

Does a Long Strangle have positive Vega?

Yes. This means if the market gets scarier and more volatile, your options will become more valuable, even if the stock price doesn't move.

What is the Max Loss?

Your Max Loss is simply the Total Premium Paid plus brokerage. You can't lose a paisa more than that.

Why do you buy Out-of-the-Money options?

Mainly to keep the cost low. It allows you to control a large amount of stock for a very small amount of money.

How much time should be left on the options?

It is usually best to buy options with at least 1–2 weeks left. Options with only 1–2 days left lose their value (Theta) far too quickly.

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