Bought Strangles – Placing Orders

Posted on October 12th, 2010 admin No Comments

If you would like to place a bought strangle it is important to be able to communicate this to your broker effectively so the correct trade is placed. Below is the order and information you need to tell your options broker:

  • Strategy: Bought Strangle
  • Trade:  Buying 3 contracts SUN $6.61 April Call

Buying 3 contracts SUN $6.37 April Puts

  • Premium Paid: $0.65
  • Type of order: Always clarify the type of order; the normal type for bought strangle is at best with a limit of $0.65. This means the broker will try for a better (lower) price so you pay less premium but not more than the limit price.
  • Length of order always should be clear whether the order is for the day only (GFD – Good for Day) or until the order is filled (GTC – Good till Cancelled). This means you will never have unexpected orders placed in the market.
  • Confirmation: Also confirm the exact order at the end of the phone conversation to try and eliminate mistakes and miscommunication.


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 07 5504 2244 or info@totaloptions.com.au

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Bought Strangles – Trade Analysis Checklist

Posted on October 12th, 2010 admin No Comments
  1. Low volatility expected to increase.
  2. Break out expected either technically or fundamentally.
  3. Breakevens are realistic.
  4. % Cost of trade is not too high.

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 07 5504 2244 or info@totaloptions.com.au

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Bought Strangles – Strategy Risks

Posted on October 12th, 2010 admin No Comments

The main risk to the bought strangle strategy is the same risk that bought options have. The risks are time decay, volatility decreasing and the share price not moving. The main risk is the share price not moving and the share price expiring between the bought call and put strike prices. If the share price does not move time decay will reduce the value of the bought strangle. Time decay works against the bought strangle as there are two bought option positions. Also if the share price has not moved volatility would have decreased. When volatility decreases the option values decrease and the bought strangle will lose value.

A risk of trading strangles with fundamental factors can be high. The main risk to be aware of is volatility. When share have trading announcements the volatility is often high before the announcement due to the uncertainty and decrease after the announcement. This can mean even if the share price moves the options values may not of increase in value due to the decrease in option volatility.

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 07 5504 2244 or info@totaloptions.com.au

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Bought Strangles

Posted on March 22nd, 2010 admin No Comments

The e-book will have detailed information about the bought strangle strategy. This is because this is the most common strategy and the strategy that I find most profitable. The bought straddle is very similar and references to the strategy will be made throughout the e-book. The sold straddle and strangle are great strategies but have much higher risks, therefore is you would like more information please contact me directly.

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

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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

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