The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we’re going to run through the basics very quickly of how to setup a short strangle. A short strangle is an option selling strategy. It’s one of the core strategies that we actually trade here at Option Alpha. I really believe in this strategy as the basic building blocks of a lot of different strategies that you can start to setup. But a short strangle is effectively created by selling an out of the money short put option and an out of the money short call option. Now, how far out you go, how many strikes out you go is up to determining the position that you are in and how often you want to win, what probability of success you want to see and also, how far out you go into expiration. There are a lot of factors and moving parts here. There's no one right answer. There's no unicorn strangle that always works in every market environment, so we encourage you to back-test your strangles and your setups and try to o