Option Straddle

Here, let me Google that for you...

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You buy the call and put at the money. You are betting the market will move more than the market maker has priced the straddle.
 
Lord Darkseid said:
Is an option straddle when a stock is expected to make a big move up or down and where can I find them?
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Example #1: (earnings today after close)
SNAP closed 10.50
Buy 10.50 straddle for 1.75 (expires tomorrow)
Profit above 12.25 or below 8.75
SNAP extended hours 8.55
Small profit if it holds until tomorrow.

Example #2: (earnings today after the close)
AMZN closed 110
Buy 110 straddle for 8.15 (expires tomorrow)
Profit above 118.15 or below 101.85
AMZN extended hours 118.4
Small profit if it holds until tomorrow.

Both of these stocks had strong moves after earnings but still *might* only have a small profit tomorrow. The market prices in a big move before earnings.
Pick other earnings stocks that don't move much after the report and you'll have a loss.
You can also short the straddle if you think the stock won't move as much as the straddle suggests.
Normally you'd buy a straddle if volatility is low but then the market isn't expecting a big move.
I think it's difficult trying to play for big moves. Easier to short straddles on ETFs IMO.
 
Last edited:
cesfx said:
I was just going to post the same thing...

Edit: there is a "let me google that for you" website, but I removed the link as it doesn't work as it used to
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:D:D:D It's indicative that we both went to LMGTFY before posting here. Same experience, BTW.
 
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