Straddles and Strangles – Volatility moves in any direction | Investing & Trading Online Course by Udemy

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Straddles and Strangles are non-directional strategies that can profit from big moves in any direction

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Straddles and Strangles – Volatility moves in any direction

STRADDLE & STRANGLE OPTION STRATEGIESStraddles and Strangles are also Volatility strategies and are very popular strategies. Both these strategies are non-directional, so its possible to profit from a movement in either direction. But the move must come fairly quickly, because we have two Long Options (one on the Call side and one on the Put side), and so our time decay exposure is doubled. Additionally, Vega exposure can be quite large, so this is something to watch for. In general, its best to put on Straddles and Strangles in times of low volatility as measured by the individual Implied Volatility of the stock itself as well as observing the level of the VIX Index. We also look at the “Valley of Death” where the trade can fall into trouble. Straddles and Strangles fall into two categories of Strategies – 1) Non-directional strategies and 2) Volatility strategies. In non-directional strategies, you dont care if the Stock goes up or down. Your strategy profits from a move in either direction. The strategy starts out Delta Neutral or at least you should try to construct it that way. But this does not mean your position will remain Delta neutral forever. In fact, your position will achieve a +ve Delta or a -ve Delta bias, depending on the stocks movement. But these strategies have one clear advantage over others. You dont have to be right in forecasting the direction of stock movement, and that fact alone put Straddle & Strangle strategies in our Favorites. What you will masterWhy are Straddles and Strangles very popularThe pluses and minuses of these strategiesWhy these strategies can be deceiving for newcomers to these strategiesWhat is a good environment for these tradesWhat is the difference between a Straddle and StrangleIs one better than the other in certain situationsWhat are the advantages and disadvantages of these tradesWhy is Vega exposure criticalWhat is the “Valley of death” and how can we avoid itDetailed analysis of the Straddle setup using Priceline and SPY ETFActual trade execution of the SPY StraddleTrade Management of the SPY StraddleAdjustments to the SPY StraddleLearnings from the Straddle tradeTackling the negatives of the Straddle

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