How to eliminate loss on an Option Straddle

[BKR88]

I'm trading option straddles. I'll buy the same strike call and the same strike put at the price and the same expiring month. If the market price is at 19.20 I have to buy both a call and put at a strike of 19. The call and the put are not identical since the the market price is not exactly at the strike of 19. I'll put the same amount of money into the call as I do in the put but I'll have some more puts than calls or vice versa. Because of this reason I'm kind of lopsided. How do you perfectly hedge a straddle option position if the market isn't exactly at the options strike price?

NOT an options expert so ...

Example:
Long 1 Call has Delta 40.
Long 1 Put has Delta 50.
Buying 10 shares of the stock will equalize Delta but that will change as price changes and time passes by.

 

[dorietrading]

You buy straddles when vola is low.
You can then gamma scalp to earn back the lost theta till de vola rises, you can then close the positions with profit, see https://tickertape.tdameritrade.com/trading/scalp-gamma-dynamic-hedge-16089

 

[stepandfetchit]

IMHO, I think O.P. realized he was going down a rabbit hole by attempting to equalize directional exposure, when a straddle was really not proper choice for what he wanted. -- I am guessing, of course.

 

[TheDawn]

I'm trading option straddles. I'll buy the same strike call and the same strike put at the price and the same expiring month. If the market price is at 19.20 I have to buy both a call and put at a strike of 19. The call and the put are not identical since the the market price is not exactly at the strike of 19. I'll put the same amount of money into the call as I do in the put but I'll have some more puts than calls or vice versa. Because of this reason I'm kind of lopsided. How do you perfectly hedge a straddle option position if the market isn't exactly at the options strike price?

You can't really eliminate losses on straddles but what you can do is reduce it by making better guesses of what the future volatility is going to be and by selling some options to reduce your cost so in case where the volatility is not as big as you predicted, your loss is mitigated somewhat.

There is no way to buy options with strikes at EXACTLY where the market price is unless the market price happens to fall EXACTLY on the strike although some options strike match very very closely to the underlying's market price. Due to the put/call parity if you spend the same amount of $$ to buy calls and puts you will always end up with more calls than puts or vice versa. What I do is I buy the same quantity of calls and puts and if I happen to spend more $$ on calls or puts, so be it.

Hope this helps.