FXH Strangle Strategy
FXH (First Trust Health Care AlphaDEX Fund), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The First Trust Health Care AlphaDEX Fund is an exchange-traded fund. The investment objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the StrataQuant Health Care Index.
FXH (First Trust Health Care AlphaDEX Fund) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $888.0M, a beta of 0.88 versus the broader market, a 52-week range of 97.52-120.34, average daily share volume of 18K, a public-listing history dating back to 2007. These structural characteristics shape how FXH etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.88 places FXH roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. FXH pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a strangle on FXH?
A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money.
Current FXH snapshot
As of May 15, 2026, spot at $112.73, ATM IV 20.20%, IV rank 31.70%, expected move 5.79%. The strangle on FXH below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this strangle structure on FXH specifically: FXH IV at 20.20% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 5.79% (roughly $6.53 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated FXH expiries trade a higher absolute premium for lower per-day decay. Position sizing on FXH should anchor to the underlying notional of $112.73 per share and to the trader's directional view on FXH etf.
FXH strangle setup
The FXH strangle below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With FXH near $112.73, the first option leg uses a $118.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed FXH chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 FXH shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $118.00 | $1.25 |
| Buy 1 | Put | $107.00 | $0.60 |
FXH strangle risk and reward
- Net Premium / Debit
- -$185.00
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$185.00
- Breakeven(s)
- $105.15, $119.85
- Risk / Reward Ratio
- Unbounded
Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit.
FXH strangle payoff curve
Modeled P&L at expiration across a range of underlying prices for the strangle on FXH. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | +$10,514.00 |
| $24.93 | -77.9% | +$8,021.59 |
| $49.86 | -55.8% | +$5,529.18 |
| $74.78 | -33.7% | +$3,036.76 |
| $99.71 | -11.6% | +$544.35 |
| $124.63 | +10.6% | +$478.06 |
| $149.55 | +32.7% | +$2,970.47 |
| $174.48 | +54.8% | +$5,462.88 |
| $199.40 | +76.9% | +$7,955.30 |
| $224.33 | +99.0% | +$10,447.71 |
When traders use strangle on FXH
Strangles on FXH are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the FXH chain.
FXH thesis for this strangle
The market-implied 1-standard-deviation range for FXH extends from approximately $106.20 on the downside to $119.26 on the upside. A FXH long strangle is the OTM cousin of the straddle: lower up-front cost but the underlying has to travel further past either OTM strike before the position turns profitable at expiration. Current FXH IV rank near 31.70% is mid-range against its 1-year distribution, so the IV signal is neutral; the strangle thesis on FXH should anchor more to the directional view and the expected-move geometry. As a Financial Services name, FXH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to FXH-specific events.
FXH strangle positions are structurally neutral / high-volatility (long premium, OTM); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. FXH positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move FXH alongside the broader basket even when FXH-specific fundamentals are unchanged. Always rebuild the position from current FXH chain quotes before placing a trade.
Frequently asked questions
- What is a strangle on FXH?
- A strangle on FXH is the strangle strategy applied to FXH (etf). The strategy is structurally neutral / high-volatility (long premium, OTM): A long strangle buys an OTM call and an OTM put at offset strikes, cheaper than a straddle but requiring a larger underlying move to profit since both wings start out-of-the-money. With FXH etf trading near $112.73, the strikes shown on this page are snapped to the nearest listed FXH chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are FXH strangle max profit and max loss calculated?
- Upside max profit is unbounded; downside max profit is bounded at the put strike minus the combined debit (reached at zero). Max loss equals the combined debit times 100 (reached anywhere between the two OTM strikes). Two breakevens at call-strike plus debit and put-strike minus debit. For the FXH strangle priced from the end-of-day chain at a 30-day expiry (ATM IV 20.20%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$185.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a FXH strangle?
- The breakeven for the FXH strangle priced on this page is roughly $105.15 and $119.85 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current FXH market-implied 1-standard-deviation expected move is approximately 5.79%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a strangle on FXH?
- Strangles on FXH are the cheaper cousin of the straddle - traders use them when they want a large directional move but are willing to give up the inner-strike sensitivity in exchange for a lower up-front debit on the FXH chain.
- How does current FXH implied volatility affect this strangle?
- FXH ATM IV is at 20.20% with IV rank near 31.70%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.