Strangle Strategies are options trading techniques that involve simultaneously buying or selling both a call option and a put option with the same expiration date but different strike prices. In crypto institutional options trading, this strategy is employed to capitalize on, or hedge against, significant price volatility in underlying digital assets.
Mechanism
A long strangle involves purchasing an out-of-the-money call option and an out-of-the-money put option, profiting from a large price movement in either direction beyond the combined premiums paid. A short strangle involves selling these options, profiting if the underlying asset’s price remains within a defined range between the strike prices. The operational mechanism within crypto platforms requires access to robust options contracts and efficient execution systems.
Methodology
The strategic methodology of strangle strategies allows institutions to express a directional view on volatility rather than price direction, or to generate income from expected price stability. For crypto assets, given their historical volatility, these strategies are potent tools for managing risk exposure, speculating on market movements, or enhancing yield in a sophisticated institutional options trading framework.
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