Short Strangle

Selling a call option and a put option on the same underlying security with different strike prices and the same expiration date to profit from a lack of significant price movement in either direction.

Description:

A short strangle is an options strategy that involves simultaneously selling a call option and a put option on the same underlying security with different strike prices and the same expiration date. The strategy is designed to profit from a lack of significant price movement in either direction and is typically used in a neutral market outlook.
The trader profits from the strategy if the price of the underlying security remains close to the strike prices at expiration. If the price of the security moves significantly away from the strike prices in either direction before expiration, both the call option and the put option will be exercised and the trader will suffer a loss. The maximum profit is limited and is equal to the net credit received to enter the position. The maximum loss is unlimited in both directions and is equal to the difference between the price of the underlying security and the strike price of the options at expiration.

Breakeven:

Leg 1 minus the net credit.
Leg 2 plus the net credit

Sweet Spot:

Stock at or between Leg 1 & Leg 2

Max Profit:

Limited to net Credit received.

Max Loss:

The maximum loss is unlimited in both directions and its stock goes down, then limited to Leg 1 minus the net credit received.