The other side of the straddle wins more often than it loses, and the model still values it at about zero. This lesson explains why, and how to keep the wins.
After this lesson you can
- Work out a short straddle's credit, breakevens and losses at different prices
- Explain why it wins more often than it loses, and why the model still values it at about zero
- See why the margin is large, and why it grows as the stock moves against you
- Take profits early, size by the gap, and know why to close before expiration
- Know what a short strangle changes, and what it doesn't
Chapters
- 0:00The other side of the straddle
- 1:34Selling a call and a put
- 2:54What it pays at expiration
- 4:19Wins often, loses big
- 5:30Time on your side
- 6:43When the big move comes
- 8:08The short strangle
- 9:22Managing a short straddle
- 10:41Five mistakes
- 11:44The whole lesson on one screen
Practice in the game: Level 6 · Steamroller