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There are two basic options strategies that have the gambler hold both a call and a put on the same stock with the same expiration date, the straddle and the strangle. You play one of these hands if you believe the price of the underlying asset is going to change quite a bit, but you don't know which way it's going to go.

In a straddle, both options have the same strike price; the strangle's two options have different strike prices.

You can play the strangle two ways, long and short. Long strangles (you buy the put and the call) come into play if you expect a lot of volatility. Short strangles (you sell both options) are used when just a little volatility is on the horizon.

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14y ago

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