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A two-leg options strategy that collects premium by betting the underlying stays inside a range through expiry — the same core idea as an Iron Condor, but without the protective long legs, trading a defined maximum loss for a bigger upfront credit.

A Short Strangle combines selling one out-of-the-money put with selling one out-of-the-money call, same expiry, with no long options to cap the risk on either side. You collect both premiums upfront, and keep them in full if the underlying finishes between the two strikes at expiry. Because there's nothing capping the loss if the underlying moves sharply in either direction, this is an undefined-risk options strategy — the trade-off for a richer net credit than a comparable Iron Condor.

If this looks like half of an Iron Condor, that's exactly what it is — a Short Strangle is the short put and short call from an Iron Condor, with the protective long put and long call removed. Removing those two legs means you're not paying for their premium, so your net credit is larger, but it also means there's nothing to stop a loss from growing if the underlying makes a big move.

Like an Iron Condor, a Short Strangle works by collecting a credit upfront and profiting from time decay while the underlying stays in range. The difference shows up in the tails:

1. Between the two short strikes — maximum profit, flat across the whole zone. Both options expire worthless and you keep the full credit.
2. Beyond either breakeven — loss grows point-for-point with the underlying, with no cap. Unlike an Iron Condor, there's no long option on either side to stop the loss from continuing to grow the further the underlying moves.

This is the core trade-off versus an Iron Condor: fewer legs, lower cost to enter (no premium paid for protection), and a larger net credit — in exchange for genuinely open-ended risk instead of a known worst case.

A Short Strangle fits the same range-bound, low-conviction outlook as an Iron Condor, but is generally better suited to traders who are comfortable with undefined risk and have the margin and risk tolerance to manage a position that could move against them without a hard cap. It's often chosen over an Iron Condor specifically when implied volatility is high enough that the extra premium collected feels worth the extra risk, or when a trader plans to actively manage or close the position well before expiry rather than holding to settlement.

Same setup as the Iron Condor example — Nifty at 24,000, weekly expiry, lot size 65 — using the exact same short strikes, so you can compare the two directly.

1. Confirm the setup. Same range view as before: you expect Nifty to stay roughly between 23,600 and 24,400.
2. Sell the out-of-the-money put at the 23,600 strike, collecting a premium of 45.
3. Sell the out-of-the-money call at the 24,400 strike, collecting a premium of 48.
4. Calculate the net credit: 45 + 48 = 93 points, or ₹6,045 at this lot size — almost double the Iron Condor example's 47-point credit, precisely because no premium was spent on protective legs.
5. Max loss: undefined. There's no further calculation here — unlike the Iron Condor's capped ₹9,945, a large enough move in either direction has no ceiling on the loss.
6. Calculate the breakevens: 23,600 − 93 = 23,507 on the downside, and 24,400 + 93 = 24,493 on the upside — both wider than the Iron Condor's breakevens, since the bigger credit gives you more room before you start losing money.
7. Hold the position while Nifty stays inside the range, same as an Iron Condor.
8. See how it resolves at expiry:
   • Nifty finishes between 23,600 and 24,400 → both legs expire worthless, you keep the full ₹6,045 credit.
   • Nifty finishes between the strikes and the breakevens → still profitable, just less than the maximum.
   • Nifty finishes beyond either breakeven → a loss that keeps growing the further it moves, with no cap.

Quick reference for the same trade:

Based on the worked example above. Notice the payoff lines keep sloping downward past the strikes, instead of flattening out the way an Iron Condor's would — that's the undefined risk, visualized. Move the cursor over the chart to see profit/loss at any price.

• Loss is genuinely undefined. This is the central risk of the strategy — a sharp, sustained move in either direction can produce a loss well beyond what the collected premium would suggest is "worth the risk."
• Margin requirements are typically much higher than for an Iron Condor, precisely because the broker is on the hook for undefined risk too — expect this to tie up meaningfully more capital than a comparable defined-risk position.
• Requires more active management. Many traders running this strategy plan to close or adjust the position well before expiry if the underlying approaches a breakeven, rather than holding to settlement the way a defined-risk position more easily allows.
• Index options on NSE are typically European-style and cash-settled — no early-assignment risk on either short leg, unlike American-style stock options.