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Long Strangle strategy description:
Buy OTM Put and Call strikes and as a result, both contracts are cheaper to buy, the Strategy's outlook for the financial instrument, is very volatile in the short-term. According to its typical characteristics, it will lose value through time decay although less than the long straddle(ATM).
At expiration, if eventually the financial asset price will be between the long contracts' strikes, then, the strategy will end up worthless meaning; total premium paid will be equal to zero.
Typically, this kind of strategy is best before critical earnings report, FDA approvals or disapprovals, major macro index which will have a significant influence on the underlying asset's pricing.
Prospect Direction: the stock will be short termed volatile either very bearish or very bullish, considering the duration disadvantage and implied volatility advantage or disadvantage, as you already know that, when financial instrument declines normally its IV values will increase and for this strategy, it is good news and bad news if the opposite happens.
Profit Potential: theoretically unlimited, since the underlying instrument can move at least infinitely upwards and to zero downwards.
Loss potential: limited to a premium paid for both contracts.
Risk reward: premium paid, divided by the unlimited profit.
Breakeven point at expiration: if underlying asset is higher than the higher options strike price then underlying price-premium paid-options strike price= zero. Else, if underlying asset is lower than the lower options strike price, underlying price +premium- strike price = zero.
Time factor: for this setup, timing is crucial, both options are long and certainly, double time decay. Every day with no abrupt move in the un-derlying asset, the losses from time decay will reduce the chances to win this trade.
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Implied volatility: typically, an increase in implied volatility would affect a positively on this strategy, all other variables being equal. Volatility tends to boost the value of any options, because it indicates a greater statistical probability that the stock will move enough to give the option intrinsic value by the expiration day. On the other hand, a decline in volatility has a tendency to lower option's value, regardless of the overall stock price trend. One more thing about IV, entering to a trade choosing high IV underlying asset will increase the time decay risk and a need for a sharper move either way, although the market in already pricing in this volatility.
Dividends: dividend affects positively on long Put option contract. On an ex-dividend date, the amount of the dividend will deduct from the value of the underlying stock. The second setup's component is the long call, which will lose from the dividend deduction.
Strangle strategy is unique, some of the traders are using this strategy in times when implied volatility is low, and they expect volatility to rise, some are using it for its typical characteristics just before a critical an-nouncement, some are using this strategy as directional. We will elaborate few of its implementations in various setups.
Typical strangle setup:
Buy OTM Put and Call options.
Just before any critical announcement when there is a good chance for a sharp move. Although it is possible that IV will rise a week or so before this critical announcement and you should consider entering at that point, a rise in the IV will boost the options price and this will compensate the loss from time decay, this will give you another chance to be there if the underlying will move before the news.
Sometime IV tend to rise so high before the news enough to give you an obscene profit so that you can get out of the trade right there.
Directional straddles:
Buy OTM Put and ATM Call options- Bullish
This strategy is bullish biased, positioning with "Positive Deltas" letting the Upside to be in favorite, also with less time expenditure (decay).
The Put option offsets some of the incurred loss, if it goes counter the preferred direction.
Buy ATM Put and OTM Call options-Bearish.
This strategy is bearish biased, positioning with "Negative Deltas" letting the downside to be in favorite, also with less time decay value.
The Call option offsets some of the incurred loss, if it goes counter the preferred direction.
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Fundamentals 
