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A strangle strategy is selling both an out-of-the-money call and an out-of-the-money put.

Expanded Definition

This works best when the underlying stock moves very little, and neither option is exercised. It covers you if one side moves more than the other side of the spread. It's a form of straddle. It's called a short straddle. You're selling both call and put in the same stock, at the same exercise price, with the same expiration date.

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