Long Straddle
#pixarts.trade , #safebull
Market View – A big move up or down The Trade – Buy a put and call at the same strike near the stock price. Your view is that the stock will either go down or up in a big way. Premium – Pay Margin – Required When To Do Pros Cons Time and Volatility […]
Market View – A big move up or down
The Trade – Buy a put and call at the same strike near the stock price. Your view is that the stock will either go down or up in a big way.
Premium – Pay
Margin – Required
When To Do
- When the stock is going to move big in one direction
- Avoid buying high IV
Pros
- Big Upside is there is a breakout
Cons
- Low probability of success
- High loss if the stock stays rangebound
- High Vega and Theta Risk
Time and Volatility
- Loses time value decay every day
- Gains if IV goes up
Max Loss : Call Premium + Put Premium
Max Profit : Very high