Straddle option strategy is a non-directional strategy. This means that you can make money without knowing where the marketplace will move. It doesn't matter when it moves up or down, you can make money when it moves either way. options strategies
The position is created by purchasing exactly the same number of call and put options with exactly the same strike price and expires at exactly the same time. There are two types of Straddle, long straddle and short straddle. Long Straddle is created by purchasing an at the cash call option and a put option. Both options are bought at exactly the same strike price and expire at exactly the same time. A quick Straddle is created by selling a put and a phone of exactly the same stock, strike price and expiration date.
Long Straddle has unlimited profit and limited loss. While on Short Straddle the profit is limited by the premiums of the options. Short Straddle loss is unlimited if stock price increases very good or going to zero.
Straddles is usually used in uncertainty like before an important corporate announcement, earning announcement, or drug approval. When the headlines eventually arrives, the purchase price should go up or down radically. Due to its characteristic, it is called a volatile option strategy. Another tip on buying Long Straddle is to get it if it is in low volatility. The cost is cheaper than when it's high volatility. When price is consolidating with an expectation so it will break out, it is the best time to Long Straddle.
Once you learn technical analysis, you are able to enter the long straddle position when it shows'triangle'or'wedge'formations. You are able to realize that the recent highs and lows are coming together. It's a signs of breakouts. calendar spread
The straddle trade is quite a long time strategy. It could take anywhere from several days up to a month, so you don't need to view it every few hours.