Short Straddle

  • When? - When the moment of the market is expected very low (sideway market) and expired on/near the sell option strike.
  • Strategy? - Sell a Call option and Put option of the same strike
  • Advantages? - Very effective in the sideway market
  • Disadvantages? - Huge margin required, unlimited losses when the market becomes trending.
  • Max Profit? - Net premium
  • Max Loss? - Unlimited
  • Break-even point? - Lower = Put Strike - Put premium - Call premium; Upper = Call Strike + Call premium + Put Premium


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