Bought Straddles vs. Bought Strangles

Posted on March 20th, 2010 admin No Comments

The biggest differences between a straddle and a strangle are the cost of the positions and how far the stock needs to move to produce a profit. Because a straddle is at-the-money both the put option and the call option will be much more expensive than the call and the put in a strangle. If you play either a strangle or a straddle around earnings, you will find that among volatile stocks, the strangle will have to move quite a bit more than the straddle to make the position profitable.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 1300 368 316 or info@totaloptions.com.au

Bought Strangle

Posted on March 19th, 2010 admin No Comments

The bought strangle involves buying both a call option and a put option of the same underlying security. Like a long straddle, the options expire at the same time, but unlike a straddle, the options have different strike prices. The owner of a bought strangle makes a profit if the underlying price moves far enough away from the current price, either above or below. Thus, an investor may take a bought strangle position if he thinks the underlying security is highly volatile, but does not know which direction it is going to move. This position is a limited risk, since the most a purchaser may lose is the cost of both options. At the same time, there is unlimited profit potential.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 1300 368 316 or info@totaloptions.com.au

Bought Straddle

Posted on March 19th, 2010 admin No Comments

A bought straddle involves purchasing, both a call option and a put option on some stock. The two options are bought at the same strike price and expire at the same time. The owner of a bought straddle makes a profit if the underlying price moves a long way from the strike price, either above or below. Thus, an investor may take a long straddle position if he thinks the market is highly volatile, but does not know in which direction it is going to move. This position is a limited risk, since the most a purchaser may lose is the cost of both options. At the same time, there is unlimited profit potential.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 1300 368 316 or info@totaloptions.com.au

Straddles and Strangles eBook

Posted on March 19th, 2010 admin No Comments

This Straddles and Strangles eBook is and introduction into trading strangles and straddles. These are non-directional trades that take advantage of large share price movements. The information will teach what market environment a bought straddles and strangles are suited for.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 1300 368 316 or info@totaloptions.com.au