Straddles, are they ever profitable?

[sle]

Danish Proverb: Det er vanskeligt at spaa, især naar det gælder Fremtiden.
English: It is difficult to make predictions, especially about the future.

However, if nobody was willing to make predictions, there would be no market period

 

[sle]

@sle ...if I'm interpreting correctly, you believe there is a good deal of subjectivity (vs objectivity) in trying to predict vol ? thanks.

Of course, as optioncoach says, if this was an objective process, there would be no market. Whatever objective methods there are (things like IV in RV distribution, IV vs IV_SPX*BETA etc), they are known and MMs use them already. You can come up with something better - hard but possible, especially if you restrict your domain (e.g. only look at high volatility Chinese stocks or something). Very hard.

In general, I would say that someone in retail world should not try to compete in the analysis game. Instead, you can be the guy willing to carry some risk others are not willing to carry for regulatory reasons or for seasonality reasons etc or for concentration reasons. It's hard work to come up with these strategies too, but being a quasi-layoff account is a real opportunity. If you do it smartly, diversify across types of risks, you might get a spanking once in a while but over the years you will do OK.

 

[CBC]

I'm pretty confident I could be profitable trading straddles ( buyer ) on CL, NG, Major FX, possibly ZN.

 

[sle]

If you have such a good call on major asset volatility, you should be managing serious money. It is a very difficult game and I honestly don't know anyone who does it consistently.

 

[tradelosses]

It seems like most option strategies suck...either you make money slowly and lose a lot at once - or you lose money slowly and possibly make a lot at once but usually don't. most option strategies are doomed by overuse of leverage.

but here is one with a 40% CAGR since 2009 http://greyenlightenment.com/post-2008-wealth-creation-guide/

there are also some good guides here:

buy-write option strategy: https://blog.thinknewfound.com/2014/12/buy-write-etfs-alternative-income-options/

TMF SPXL universal strategy CAGR ~30% http://logical-invest.com/universal-investment-strategy/

 

[tradelosses]

If you have such a good call on major asset volatility, you should be managing serious money. It is a very difficult game and I honestly don't know anyone who does it consistently.

the pros collect fees..that's where the money is reallly made

 

[TradeCat]

Options are great for those who have money to burn. You make a lot of money some days, which boosts your ego and makes you delusional to the point that you think you can call direction unlike every other jackass on a PC, and then you lose it all on other days. Then the cycle repeats.

Straddles are great for those who don't understand that they make and lose money at the same time.

 

[sle]

Straddles are great for those who don't understand that they make and lose money at the same time.

What the fuck is that supposed to mean?

 

[sss12]

Options are great for those who have money to burn. You make a lot of money some days, which boosts your ego and makes you delusional to the point that you think you can call direction unlike every other jackass on a PC, and then you lose it all on other days. Then the cycle repeats.

Straddles are great for those who don't understand that they make and lose money at the same time.

You don't understand the thesis of the strategy. Ultra-simplified...The gain on one side is MORE than the loss on the other , hence a profit, in a successful trade.

 

[Kim Klaiman]

There are few ways to trade straddles profitably - https://steadyoptions.com/articles/straddle-option/