http://investingadventures.com/2007/11/new-weapon-to-arsenal.html Having Fun with Options Sun, 15 Apr 2012 04:37:33 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://investingadventures.com/2007/11/new-weapon-to-arsenal.html/comment-page-1#comment-687 Alex - My Trader's Journal Thu, 06 Dec 2007 13:45:08 +0000 http://investingadventures.com/2007/11/new-weapon-to-arsenal.html#comment-687 The straddle is good to use at the right time, but a strangle can be too. That's where you sell both sides. If it flattens you have a profit from both, but if it edges in either direction you only have a profit from one. If it takes off in either direction you face large losses. I think it's worth checking the implied volatility of any option before picking a direction. Too high vol can lead to a quick drop in premium and vice versa. The straddle is good to use at the right time, but a strangle can be too. That’s where you sell both sides. If it flattens you have a profit from both, but if it edges in either direction you only have a profit from one. If it takes off in either direction you face large losses.
I think it’s worth checking the implied volatility of any option before picking a direction. Too high vol can lead to a quick drop in premium and vice versa.

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