Last year, Options Trader compared two similar option strategies that depend on large underlying price swings or volatility spikes to profit: long straddles and strangles. Although neither strategy is preferable in all situations, the article concludes that a long strangle’s payoff is larger in most circumstances, regardless of when its options expire (see "Related reading").

The following approach revisits the long straddle-strangle debate by analyzing each position’s return on investment (ROI) and pinpointing scenarios in which long strangles outperform straddles and vice versa. Each strategy has benefits and drawbacks. The trick is to calculate the ROI for both positions at option expiration and different times prior to this event (see "Comparing ROI: Straddles and strangles" for more details).