Short Strangle
#pixarts.trade , #safebull
Market View – Range-bound, Not moving The Trade – Sell a Put below stock price and sell a Call above the stock price. Your view is that the stock will not cross the call or put strikes. Premium – Receive Margin – Required When To Do Pros Cons Time and Volatility Max Loss : Very […]
Market View – Range-bound, Not moving
The Trade – Sell a Put below stock price and sell a Call above the stock price. Your view is that the stock will not cross the call or put strikes.
Premium – Receive
Margin – Required
When To Do
- If the stock will stay still and expire between the call and put strike.
- Avoid trending markets
- Avoid selling low IV
Pros
- Delta Neutral – Immune to small moves
- Make money if nothing happens
- Higher margin of safety compared to straddle
Cons
- High loss if market moves a lot in one direction
Time and Volatility
- Gains time value decay every day
- Loses if IV goes up
Max Loss : Very high
Max Profit : Call premium + Put premium