advancedHigh RiskBullish
Covered Strangle
Own shares, sell an OTM call AND an OTM put to collect double premium.
What is a Covered Strangle?
You own 100 shares, sell an OTM call (like a covered call), and also sell an OTM put. The put is short — if the stock falls below the put strike, you're obligated to buy another 100 shares. In return, you collect premium from both sides — potentially doubling your income vs. a covered call alone.
When to use it
Use when you're bullish and would welcome buying more shares on a dip. High-risk if the stock crashes — you end up with double the shares at a loss.
Structure
Own 100 shares + sell 1 OTM call + sell 1 OTM put, same expiration.
Key Metrics
Max Profit
Total premium received + (call strike − stock price) × 100 if stock rises.
Max Loss
Large if stock falls sharply — obligated to buy more shares at the put strike.
Breakeven
Stock price − total premium received (on the downside).
Greeks Profile
Theta: strongly positive. Delta: high positive (leveraged exposure). Vega: negative.
Tips & Best Practices
- 1Only do this if you genuinely want to double your position if the stock falls.
- 2Size your position so a put assignment doesn't blow up your account.
- 3The extra premium is real income — but so is the risk.
- 4Consider only on quality blue-chip stocks with strong fundamentals.
See it in action
Model a Covered Strangle with a real ticker. See the P&L chart, heatmap, and exact breakevens.
Open Covered Strangle Calculator →