The IV risk with short strangles

[newwurldmn]

Just watch your gamma near expiry - Strangles are not the worst trade-that would be covered calls, and the bad part is the underlying

??

Strangles have virtually unlimited risk on two sides. Covered calls on only one side.

 

[taowave]

What about that "nasty" underlying

??

Strangles have virtually unlimited risk on two sides. Covered calls on only one side.

 

[earth_imperator]

??

Strangles have virtually unlimited risk on two sides. Covered calls on only one side.

And option spreads on neither side As it's capped.

 

[newwurldmn]

What about that "nasty" underlying

I would MUCH rather be just short the call naked. It’s way safer.

 

[earth_imperator]

I would MUCH rather be just short the call naked. It’s way safer.

BS
Otherwise just explain why/how "safer"?
The question is about the IV risk after shortselling and before expiration, see the title of the thread.

 

[taowave]

^^^^I cant wait for you to start trading

 

[Adam777]

Thanks. It seems there is a lot of basic stuffs I need to learn about options. Because this got me thinking and confused.

I suggest you read a basic book (or website) about options trading, and then do a basic course (or paid mentoring) where you trade alongside someone, putting on trades with real money and exiting at the same time as them. I learnt this lesson the hard way. You mainly learn by actual trading, and not years spent just reading books and just chatting on forums ... I'm talking about myself here

 

[Windlesham1]

??

Strangles have virtually unlimited risk on two sides. Covered calls on only one side.

A lot of misconceptions about strangles but over time you will get killed with covered calls- like this year. Manage your risk with a strangle, then losses are not infinite,but as I said it's not the worst trade.

 

[taowave]

You need to rethink things...

A lot of misconceptions about strangles but over time you will get killed with covered calls- like this year. Manage your risk with a strangle, then losses are not infinite,but as I said it's not the worst trade.

 

[newwurldmn]

A lot of misconceptions about strangles but over time you will get killed with covered calls- like this year. Manage your risk with a strangle, then losses are not infinite,but as I said it's not the worst trade.

you didn’t specificy delta hedging the strangle. Two different trades completely and the hedges strangle still has infinite loss risk on both sides (unless it becomes a married put or a covered call, but then you are likely massively underwater)