Selling a strangle instead of a straddle
Asked at Optiver, SIG
A stock trades at . Instead of a straddle, you sell the -strike call and the -strike put (same expiry), collecting \4$ total premium.
Describe your P&L at expiry. How does this short strangle compare to a short straddle on the same name? Why is it still "short volatility"?
Show a hint
Between the two strikes both options expire worthless. What happens outside that band?
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.