Short Strangles...
Short Strangle Profit Loss Chart The Short Strangle strategy is similar to the Short Straddle strategy, except you sell the call option(s) and the put option(s) at different strike prices. When entering a Short Strangle position an investor will sell (short) a certain number of out-of-the-money (OTM) call contracts while simultaneously selling (shorting) the same number of out-of-the-money put contracts for the same target month. Like the Short Straddle position, Short Strangles have a set maximum profit and potentially unlimited risk if the stock goes against you. Since the investor is selling options there is a net credit achieved when the position is opened. The maximum profit for the strangle position is equal to the net credit. The maximum profit is realized if the stock remains stagnant and the stock price remains between the two sold strike prices at expiration. By selling both a call and a put there is both an upper and lower-break even. Profit can be realized if the stock price is above the lower break even or below the upper break even at expiration. Since the stock can go infinitely up or fall towards \$0 value, there is a potentially unlimited risk as the option(s) may need to be bought back to avoid assignment. The Short Strangle is a neutral position. The investor will profit from short strangles if the stock stays stagnant and expires within the profitable range.
 Sell (short) out-of-the-money (OTM) call(s) in a selected target month. Sell (short) the same number of out-of-the-money (OTM) put(s) for the same month. The maximum profit is the net credit (total premiums received). The maximum risk is infinite in either direction (infinite to 0 on the put side/decline). The position has both an upper break even and a lower break even. Profit is realized if the stock price remains between the upper and lower break even points.
Calculations for Short Strangles are:
Upper Break Even = Call Strike Price + Net Credit
Lower Break Even = Put Strike Price - Net Credit
Probability Sum = (Prob. Above Upper Break Even) + (Prob. Below Lower Break Even) (Reflects Probability that the spread will fail. Look for a lower Probability Sum)
Where...
Net Credit = Premium of Sold Call + Premium of Sold Put
% Return = Net Credit ÷ (Call Strike Price + Put Premium) - Net Credit

Example: Stock XYZ at \$89.30 per share.
Sell the NOV 95 Call for \$2.40
Sell the NOV 80 Put for \$1.70
Max. Profit = Net Credit = \$2.40 + \$1.70 = \$4.10
Upper Break Even = Call Strike + Net Credit = \$95.00 + \$4.10 = \$99.10
Lower Break Even = Put Strike - Net Credit = \$80.00 - \$4.10 = \$75.90
% Return = Net Credit ÷ (Call Strike Price + Put Premium) - Net Credit
% Return = \$4.10 ÷ (95 + \$1.70) - \$4.10 = 4.4%

 If the stock remains between both strike prices at expiration, both of the options will expire worthless and the investor will keep the entire Net Credit (maximum profit) If the stock remains below the put strike price but above the lower break even the investor will still realize a profit. If the stock remains above the call strike price but below the upper break even the investor will still realize a profit. An initial net credit is received on the transaction so the investor does not have to put up any money to enter the position. Since the investor is using two different OTM strike prices in the short strangle position, the stock can move in a wider range than in the Short Straddle position and still be profitable. With short strangles, no stock is actually owned. (uncovered position).

Cautions with this strategy:
 The investor can take a loss if the stock swings quickly in one direction or the other due to unforeseen events. The risk/max loss can be almost infinite because of the obligation to buy or sell shares that are not owned. Because of this risk, the margin requirements for this strategy are fairly high. Your broker may require you to cover both options as if they were two Naked Options, or they may require a cash value of the Option Strike Price plus the highest bid of the call or the put. Because the investor is selling two OTM options, there is a lower net credit than with a Short Straddle position, but the stock has more space to move before the position is a loss. Action must be taken if either option expires ITM.
Research Tips:
 If you are looking to short a call and put more aggressively: Short Straddle . If you were looking to go long options to take advantage of stock fluctuation: Long Strangle. If you want to lower your margin but still are nuetral on the stock or index: Iron Condor.