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Straddles 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 don’t 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 stock’s movement. But these strategies have one clear advantage over others. You don’t have to be right in forecasting the direction of stock movement, and that fact alone put Straddle & Strangle strategies in our Favorites.
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|Section 1: INTRODUCTION TO STRADDLES AND STRANGLES|
|Introduction to the Straddle and Strangle trades. Discussion of the similarities and differences between the two.|
|Section 2: THE STRADDLE|
|Detailed analysis of a Straddle trade on Priceline (PCLN)|
|Setup of the Straddle trade on the SPY ETF. This is the trade we'll put in this course and monitor for its parameters|
|Section 3: The STRANGLE|
|Analysis of a Strangle trade on Priceline (PCLN)|
|Analysis of a Strangle trade on the SPY ETF|
|Section 4: THE STRADDLE TRADE - TRADE MANAGEMENT on the SPY ETF|
|Analysis the SPY Straddle - 1 day after the trade is placed|
|Analysis of the Straddle - Part 2|
|Analysis of the Straddle - Part 3. Study of the effects of Volatility crush|
|Analysis of the Straddle - Part 4. Tackling the negatives of a straddle|
|Conclusion and Learnings from a Straddle trade.|
Straddles and Strangles Quiz
Knowledge. Strategy. Execution.
Hari Swaminathan is the founder of OptionTiger, a cutting-edge Options education and trading company based in Washington D.C.. Hari is an entrepreneur, everyday person and a self-taught Options expert for over 8 years. Hari has a Bachelors degree in Engineering from India, and MBA degrees from Columbia University in NYC and London Business School in the U.K.
More than ever, its become important for everyday people to take control of their financial situation, and create additional income in a smart, risk-controlled manner. This is precisely my mission. Through knowledge, education and investment discipline. Options are powerful, but they have a learning curve. I've broken down all the complexities of Options in simple language that everyone can understand. The courseware uses real trade examples, always highlighting the pluses and minuses of every investment situation. Options provide the best way to take advantage of bull cycles, bear cycles and everything in between.
As someone that has self-learnt Options and through making mistakes, I can tell you Options trading is not something you should take lightly. You will hear people talking of fantastic triple and quadruple digit returns. I'm here to be brutally honest with you -
- Be very very careful in the first 12 months of Options trading.
- This is when everyone is the most vulnerable to losing money.
- Your main objective during this time is to focus on learning this craft and not lose money during this time.
Having said that, if you can get past the first 12 months and acquire the expertise in a systematic manner, true financial independence awaits. Options are a mathematical and strategic game much like Chess, and no amount of technological advances can make this skill obsolete, because the fundamentals of Options are never going to change.
You can trade Options from anywhere in the world, regardless of how old you are. You never have to worry about job security any more because you have a skill that can produce consistent wealth month after month.
But you have some serious but exciting work to do before you can get there, and I'm here to help you in this journey.
Watch my Free Course for Options Trading Beginners where I draw out a detailed roadmap of what this 12-month journey looks like, and the specific strategies you should master during each step of this learning process.
Watch my Free Mini-courses or my YouTube channel , all of which have the highest quality of education material.
And join me in my UDemy courses, where I share cutting-edge theoretical knowledge mixed with practical insights, strategy and impeccable execution through live trading examples.
If you have any questions at any time, please feel free to message me on Udemy.
The order to follow on my Udemy courses
Comprehensive guide to Financial Markets, Investing and Trading
Options Trading Beginners Bundle (3-course Bundle)
Advanced Options Concepts
Options spreads and credit spreads Bundle
Technical analysis and Chart reading Bundle
After this, the order does not matter. You can take any of the courses as per your interest.