Long Straddle Option Strategy



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Comments

  1. Thanks good explanation. Two questions:

    1) How do you know what the premium is? It looks like you had your breakeven points at about +- $7 from the current price, but you didn't go into detail on how you determined $7.

    2) Should the expiration date of the option be the nearest one?
  2. And how does 'things being priced in' reconcile with standard deviation (IV? Same thing, kinda?) What am I looking for in the charts to put this trade on, if I'm not just going off of the news 'headlines''? And wo getting into black scholes, what other than the VIX (and Greeks) on a day to day basis, is going into options premiums? Is it just the VIX?
  3. Wow. Helped. Thanks
  4. So if the stock made a large upwards gain, which subsequently makes the call option feasible to exercise or trade, you still have to compensate from the loss of premium from the put that you placed? If I am not mistaken, at the money options have low intrinsic value and decreasing time value dependent how close you're to expiration. The only time I would use this strategy is when news comes out or if intra weekly volatility is projected high, but again it's probably priced in the premium. 
  5. Correct me if I am wrong, on your example, if the market moves to 50, how can we exit? Are we suppose to add to the break even the loss of the other option (downside)? Also, if we exit on 50 on one option, do we exit the other option too, or just wait for to expire?
  6. Either a long or short strangle depending on where the volatility was at the time.
  7. Thanks it was very helpful , to me this is a free lesson . I appreciate that . Yhanks
  8. Thanks man , I new that I would profitable to do staddle on some stocks like expedia 30 percent drop but I didn't know which direction it was going , now finally I know what it means . Good luck to you
  9. In that case you buy the closest expiration month out.
  10. Kirk but a straddle doesn't need to move as much as a strangle to become profitable?


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