| Position Composition | Risk Profile @ Expiration |
Shown here, both contracts are OTM. But one could be OTM and the other ITM.
 | Short 1 call, short 1 Put
Both contracts have the same underlying and same expiration, but a different strike price. |  | Max Loss: Unlimited.
Max Gain: Total credit received for the strangle, which is the credit for the short call plus the credit for the short put.
E.g., $1.10 + $1.10 = $2.20 |
| Greeks-at-a-Glance | P&L caused by movement in stock price
| Movement toward strike generates profits; away from strike generates losses. | P&L corresponding to changes in implied volatility
| Short strangles and straddles benefit from falling IV. Rising IV is detrimental. | Time Decay
C:RR ratio is explained in "Decision Making" | Always Positive. Trader seeks to be paid more than he is losing to realized risk. So he seeks a C:RR ratio above +1.00, the higher the better. | |
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