A long position in a strangle is:
A) A short squeeze on a straddle.
B) Worth more than a straddle whose strike lies within that of the strangle.
C) Worth less than a straddle whose strike lies within that of the strangle.
D) A choke hold on someone else's throat.

Question

Quizplus · Accepted Answer

A long position in a strangle involves buying both a call option and a put option with different strike prices, typically with the call having a higher strike price and the put having a lower strike price. This strategy is generally cheaper than a straddle (where the call and put have the same strike price) because the options are out-of-the-money, making the premium lower. Therefore, a strangle is worth less than a straddle whose strike lies within that of the strangle, as the straddle's options are closer to being in-the-money or are already in-the-money, making them more expensive due to a higher likelihood of profitability.

A Long Position in a Strangle Is