This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an
This strategy is just the opposite of Long Straddle. A trader should adopt this strategy when he expects less volatility in the near future. Here, a trader will sell one Call Option & one Put Option of the same strike price, same expiry date and of the same underlying asset. If the stock/index hovers around the same levels then both the options will expire worthless an ..
Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium
Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium
SHORT STRADDLE Vs SHORT STRADDLE - When & How to use ?
SHORT STRADDLE
SHORT STRADDLE
Market View
Neutral
Neutral
When to use?
This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
This strategy is work well when an investor expect a flat market in the coming days with very less movement in the prices of underlying asset.
Action
Sell Call Option, Sell Put Option
Sell Call Option, Sell Put Option
Breakeven Point
Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium
Lower Breakeven = Strike Price of Put - Net Premium, Upper breakeven = Strike Price of Call+ Net Premium
SHORT STRADDLE Vs SHORT STRADDLE - Risk & Reward
SHORT STRADDLE
SHORT STRADDLE
Maximum Profit Scenario
Max Profit = Net Premium Received - Commissions Paid
Max Profit = Net Premium Received - Commissions Paid
Maximum Loss Scenario
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Maximum Loss = Long Call Strike Price - Short Call Strike Price - Net Premium Received
Risk
Unlimited
Unlimited
Reward
Limited
Limited
SHORT STRADDLE Vs SHORT STRADDLE - Strategy Pros & Cons
SHORT STRADDLE
SHORT STRADDLE
Similar Strategies
Short Strangle
Short Strangle
Disadvantage
• Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
• Unlimited risk. • If the price of the underlying asset moves in either direction then huge losses can occur.
Advantages
• A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .
• A trader can earn profit even when there is no volatility in the market . • Allows you to benefit from double time decay. • Trader can collect premium from puts and calls option .