An Option Strangle involves which components?

An Option Strangle is a strategy that involves taking a long position in both a call option and a put option, but these options must have different strike prices. This strategy is designed to profit from a significant movement in the underlying asset's price, regardless of the direction—upward or downward. By using different strike prices, the investor can establish a greater range of potential price movement, leading to the benefit of capturing more volatility.

In a typical strangle, the call option will be purchased at a higher strike price, while the put option will be purchased at a lower strike price. This setup allows the investor to profit if the market moves significantly in either direction beyond the respective strike prices, up or down.

The other components outlined in different options do not describe a strangle accurately, as they either involve positions with the same strike price or in a short position, which are characteristics of other strategies such as a straddle (same strike price) or a short straddle (selling both a call and a put option). Therefore, the correct answer accurately captures the specific nature of an Option Strangle.