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Motivated by properties-controlling potential of the strain, we investigate strain dependence of structure, electronic and magnetic properties of Sr$_2$IrO$_4$ using complementary theoretical tools: {\it ab-initio} calculations, analytical approaches (rigid octahedra picture, Slater-Koster integrals), and extended $t-{\mathcal{J}}$ model. We find that strain affects both Ir-Ir distance and Ir-O-Ir angle, and the rigid octahedra picture is not relevant. Second, we find fundamentally different behavior for compressive and tensile strain. One remarkable feature is the formation of two subsets of bond- and orbital- dependent carriers, a compass-like model, under compression. This originates from the strain-induced renormalization of the Ir-O-Ir superexchange and O on-site energy. We also show that under compressive (tensile) strain, Fermi surface becomes highly dispersive (relatively flat). Already at a tensile strain of $1.5\%$, we observe spectral weight redistribution, with the low-energy band acquiring almost purely singlet character. These results can be directly compared with future experiments.