The Strangle Strategy: Making Money When You're Unsure Which Way the Market Goes

Ever heard someone say “it could go either way”? In crypto trading, especially options trading, that uncertainty isn’t a weakness—it’s actually an opportunity. The strangle options strategy lets traders profit from big price moves without needing to pick a direction. Let’s break down how this strategy works and why so many crypto traders are using it.

What’s a Strangle in Crypto Options?

A strangle is straightforward in concept: you buy (or sell) both a call and a put option on the same crypto asset with identical expiration dates but at different strike prices. The key difference from other strategies is that both positions are out-of-the-money (OTM)—meaning they have no intrinsic value yet.

Why would traders do this? Because when you own both a call and a put, you win if the price makes a massive move in either direction. The asset just needs to move enough to compensate for the premiums you paid. This makes strangle options particularly valuable for volatile markets where big swings are expected.

When Implied Volatility Makes the Difference

Here’s where the strategy gets interesting: strangles are all about implied volatility (IV). IV measures how much uncertainty exists in the market and directly impacts how much options contracts cost. When major catalysts loom—like regulatory announcements, protocol upgrades, or macroeconomic news—IV typically spikes, and options become more expensive.

Crypto options traders watch IV like hawks. They know that before big events (think Bitcoin spot ETF decisions), volatility tends to increase. This is when strangle strategies become most attractive because markets are priced for big moves, but traders aren’t always sure which direction that move will take.

Long Strangle vs. Short Strangle: Two Sides of the Same Trade

Long Strangle (Buying the Strategy)

With a long strangle, you’re purchasing both OTM call and put options. Your maximum loss is limited to the total premiums paid, but your upside is theoretically unlimited if the asset makes a substantial move in either direction.

Let’s use a real example: Bitcoin trading around $34,000 before a major announcement. You expect serious volatility but can’t call the direction. You could buy a $30,000 put and a $37,000 call (both expiring on the same date). This costs roughly $1,320 in combined premiums and gives you exposure to a 10% move in either direction. If Bitcoin rallies to $40,000 or crashes to $28,000, your call or put becomes profitable enough to offset the premium costs and generate gains.

Short Strangle (Selling the Strategy)

The opposite play is selling both OTM options—you collect the premiums upfront but face unlimited risk if prices move too far. If you believe Bitcoin will trade sideways and not make that big move, selling a $37,000 call and $30,000 put collects that same $1,320 in premiums. Your profit is capped at the premiums, but your losses could spiral if volatility explodes and breaks through your strike prices.

Why Traders Love This Strategy

Capital Efficiency: OTM options are cheap. Because they have no intrinsic value, premiums are lower, allowing traders to control larger positions with less capital.

Direction Flexibility: You don’t have to pick. In uncertain markets where technicals are mixed and on-chain signals are unclear, this is gold. You’re betting on volatility itself, not on a specific direction.

Event-Driven Trading: Major catalysts create volatility spikes. Strangle traders can position themselves before announcements and profit from the expected move, regardless of outcome.

The Risks You Can’t Ignore

Theta Decay Kills Profits: Every day that passes, your OTM options lose value—even if nothing happens in the market. This accelerates in the final days before expiration. Many beginners get destroyed by holding strangles too long and watching premiums evaporate.

Huge Moves Required: Because options are OTM, the price needs to move significantly just to break even. A 3% move might not cut it. You often need 7-10% or more depending on strike selection and premiums paid.

Timing is Everything: This isn’t a “set and forget” strategy. Traders need sharp market timing skills and a solid understanding of which catalysts will actually move prices. Guessing wrong about an upcoming event can be costly.

Not for Beginners: Selecting the right strike prices and expiration dates requires experience. New traders often overpay for premiums or set strikes too far from current price, making it nearly impossible to profit.

Strangle vs. Straddle: Which One?

Both strategies let you profit from big moves without picking direction, but there are trade-offs:

• Straddle: Same strike price for both call and put. More expensive because you’re buying options with intrinsic value. Requires smaller moves to profit but costs more upfront.
• Strangle: Different strike prices, both OTM. Cheaper to set up but needs bigger moves to hit profitability.

If you have limited capital and higher risk tolerance, strangle is the play. If you want lower risk with better odds of profit, straddle is the safer pick—though it costs more.

The Practical Reality

The strangle options strategy works because market catalysts create real volatility. Traders who understand when IV is about to spike and which events actually move prices can use strangles to capture those moves efficiently.

But it’s not magic. Strike selection matters. Timing matters. Knowing when to take profits before theta decay accelerates matters. It’s a tool for experienced traders who’ve done the homework on reading implied volatility and spotting genuine catalysts versus hype.

The edge here isn’t about being right on direction—it’s about being right on volatility and timing.