SHORT STRANGLE	RISK REVERSAL
About Strategy	Short Strangle Option Strategy  This strategy is similar to Short Straddle; the only difference is of the strike prices at which the positions are built. Short Strangle involves selling of one OTM Call Option and selling of one OTM Put Option, of the same expiry date and same underlying asset. Here the probability of making profits is more as there is a spread between the two strike prices, and if Read more..	Risk Reversal Option Strategy This strategy protects an investor from unfavourable price movements in the position but limits the profits can be made on that position. A risk reversal is a hedging strategy that protects a long or short position by using put and call options. In this one option is buying and other is written. In this strategy the trader has to pay a premium, while the written option prod .. Read more..

SHORT STRANGLE Vs RISK REVERSAL - Details

	SHORT STRANGLE	RISK REVERSAL
Market View	Neutral	Bullish
Type (CE/PE)	CE (Call Option) + PE (Put Option)	CE (Call Option) + PE (Put Option)
Number Of Positions	2	2
Strategy Level	Advance	Advance
Reward Profile	Limited	Unlimited
Risk Profile	Unlimited	Unlimited
Breakeven Point	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Premium received - Put Strike Price

SHORT STRANGLE Vs RISK REVERSAL - When & How to use ?

	SHORT STRANGLE	RISK REVERSAL
Market View	Neutral	Bullish
When to use?	This strategy is perfect in a neutral market scenario when the underlying is expected to be less volatile.	This strategy can be used for hedging. When an investor want to protect long or short position by using a call and put option.
Action	Sell OTM Call, Sell OTM Put	This strategy work when an investor want to hedge their position by buying a put option and selling a call option.
Breakeven Point	Lower Break-even = Strike Price of Put - Net Premium, Upper Break-even = Strike Price of Call+ Net Premium	Premium received - Put Strike Price

SHORT STRANGLE Vs RISK REVERSAL - Risk & Reward

	SHORT STRANGLE	RISK REVERSAL
Maximum Profit Scenario	Maximum Profit = Net Premium Received	You have unlimited profit potential to the upside.
Maximum Loss Scenario	Loss = Price of Underlying - Strike Price of Short Call - Net Premium Received	You have nearly unlimited downside risk as well because you are short the put
Risk	Unlimited	Unlimited
Reward	Limited	Unlimited

SHORT STRANGLE Vs RISK REVERSAL - Strategy Pros & Cons

	SHORT STRANGLE	RISK REVERSAL
Similar Strategies	Short Straddle, Long Strangle	-
Disadvantage	• Unlimited loss is associated with this strategy, not recommended for beginners. • Limited reward amount.	Unlimited Risk.
Advantages	• Higher chance of profitability due to selling of OTM options. • Advantage from double time decay and a contraction in volatility. • Traders can book profit when underlying asset stays within a tight trading range.	Unlimited profit.