Short strangles are a great options strategy, but a given % of times, they will be tested, and the sides will be breached. This has negative consequences on not just your P/L, but also your state-of-mind. Being a naked options strategy, short strangles can actually result in huge draw downs, if the instrument prices don’t go our way.

So what can you do with a short strangle which is turning ugly? You can modify your trade several ways actually.

Short strangle defense strategies