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.

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