Strategy For Unknown Direction
- Thread starter infolode
- Start date
Quote from nikko309:
There are many ways to skin the cat. You have to get comfortable with the strategies that are within your comfort zone. Your conclusion is the obvious one. Find out what option niche suits you.
And please forgive me for teasing you about your spelling.
I just couldn't resist that one
Yes, thank you for the additional information. I'm sifting through various tutorials now and will continue to do so.
My spelling is atrocious, I must admit. I never lasted past the third round in spelling beez.
Try a long straddle. This is buying both a call and a put. If you are more bullish than bearish, you may wish to buy more calls than puts, and vice versa. The optimum time to buy is probably just the day before you expect the breakout. This way you don't suffer the option's decay. Options "melt" a little in value each day.
This scenario doesn't work too well before earnings. The prices of the options are pumped up so far before earnings that the stock really has to move a lot. But, if this is your own private analysis of a breakout point, then the options aren't pumped up too high in value like they are before a widely recognized event such as earnings.
Double slingshots don't benefit from IV rushing. I hope you already know it is just 2 flies on both sides with extra wings. Unless you have so many wings that the position is +vega, IV falling will be in the position's best interest. Why you'd want to scalp muted long gamma in the 2x slingshoty over the massive straddle long gamma is beyond me.
