A Short Strangle is a neutral options strategy involving the simultaneous sale of an OTM call and an OTM put on the same underlying with the same expiry. Unlike a Short Straddle (which uses ATM strikes), the strangle's strikes are placed beyond the current market price on both sides, giving the underlying more room to move before the position loses money. The maximum profit is the total premium collected from both legs; the maximum loss is theoretically unlimited if the underlying breaks out strongly in either direction. Short Strangles are a popular income strategy for Nifty option sellers in India, particularly using weekly expiry contracts where time decay is fast and the probability of staying within the two strikes is relatively high.
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