The Calendar Strangle is a neutral options strategy designed to profit when a stock is expected to moved within a tight channel in the short term while still keeping the potential for profiting should the stock stage a breakout. The Calendar Strangle produces this effect by buying a long term Strangle while writing a short term Strangle.
Calendar Strangle is a Calendar Spread that optimizes profit through the higher rate of time decay of the short term Strangle versus the long term Strangle while allowing you the option of simply keeping the long term Strangle by closing the short term Strangle anytime the underlying stock is expected to stage an explosive breakout.
The Calendar Strangle is a cousin of the Calendar Straddle which works on the same principles but the Calendar Strangle has the advantage of a wider profitable range on the short term strangle at the cost of a lower potential profit.