About the Straddle & Strangle Calculator
This straddle and strangle calculator shows the expiration payoff of the two classic volatility trades. A straddle buys (or sells) a call and a put at the same strike; a strangle uses an out-of-the-money put strike below the stock and a call strike above it. Enter the strikes, the premiums for each leg, the number of contracts and a target price, and it returns the total debit or credit, the lower and upper break-even prices, how far the stock must move to reach them, the maximum profit and loss, and your profit or loss at the target.
Long straddles and strangles are used ahead of earnings, FDA decisions or other events when you expect a big move but not its direction. Short versions collect premium when you expect the stock to stay in a range, at the cost of open-ended risk. The payoff chart makes the trade-off clear at a glance.
Results are at expiration and ignore commissions, early assignment and the time value left before expiry. Each standard US equity option contract covers 100 shares; change the multiplier for mini or index options.
How to use the straddle & strangle calculator
- 1Choose straddle or strangle, and long or short.
- 2Enter the current stock price and the strike or strikes.
- 3Enter the call and put premiums per share from the option chain.
- 4Set the number of contracts and a target price at expiration.
- 5Read the break-even range, max profit and loss, and study the payoff chart.
Formula and method
A long straddle or strangle pays the call premium plus the put premium, D per share. At expiration the call is worth max(0, S − Kc) and the put max(0, Kp − S); the position profits when the combined intrinsic value exceeds D, so the break-evens are Kp − D and Kc + D. For a straddle Kp = Kc. Maximum loss is D per share, reached when the stock finishes between (or at) the strikes; upside profit is unlimited.
A short straddle or strangle is the mirror image: you receive D, which is the maximum profit, and the loss grows without limit as the stock rises (and up to Kp − D per share if it falls to zero). Dollar figures multiply the per-share result by contracts × shares per contract.
- D
- Combined premium per share
- Kp
- Put strike (lower; equals Kc for a straddle)
- Kc
- Call strike (higher)
- S
- Stock price at expiration
Worked examples
Long $100 straddle before earnings
Buying the $100 call for $4.20 and the $100 put for $3.80 costs $8.00 per share, or $800 for one contract. The stock must move 8% either way — above $108 or below $92 — to break even. At $112 the call is worth $12, so the trade makes (12 − 8) × 100 = $400.
Long 95/105 strangle, stock unchanged
The out-of-the-money options cost only $3.50 combined, or $350, but the break-evens widen to $91.50 and $108.50. If the stock is still at $100 at expiration both options expire worthless and the full $350 is lost.
Short straddle, 2 contracts
Selling the $50 call and put collects $4.50 per share, $900 on 200 shares. The trade profits between $45.50 and $54.50. At $53 the short call costs $3 to close, so the profit is (4.50 − 3.00) × 200 = $300.
Frequently asked questions
What is the difference between a straddle and a strangle?+
A straddle uses a call and a put at the same strike, usually at the money. A strangle uses an out-of-the-money put and an out-of-the-money call at different strikes. Strangles are cheaper to buy but need a bigger move to reach break-even.
How do you calculate straddle break-even points?+
Add the call and put premiums. The upper break-even is the strike plus that total and the lower break-even is the strike minus it. A $100 straddle costing $8 breaks even at $108 and $92 at expiration.
When should you buy a straddle?+
A long straddle makes sense when you expect a large move but are unsure of direction, and when you think the market is underpricing that move. Before earnings, implied volatility is usually high, so the options are expensive and the post-event volatility crush can cause losses even after a decent move.
What is the risk of a short straddle or strangle?+
Selling both options collects premium but carries unlimited upside risk and large downside risk if the stock gaps. Brokers require significant margin, and a single big move can wipe out many months of collected premium.
Can I close a straddle before expiration?+
Yes. Most traders exit before expiry. The position’s value then includes time value and depends on implied volatility, so actual profit or loss will differ from this expiration payoff — usually better for long positions closed early.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.