Trading Long Straddles

Well I appreciate the candid input. I am looking at some different things. Haven´t got far enough long on my looking though, to talk about it. Under certain conditions I can see where the Straddle will work.

I got out of the 57 long straddle and only made about $5 or $6 on it net profit. At least I didn´t lose anything. Something like 1/2 of 1% or something. Bit disappointing, but the market has been stalled a few days under a resistance line. I´m still holding the 58 long straddle. I can go next week on that one, I think. The big cost in long straddles are the commissions.

I´m re-thinking buying straight calls and puts. And have worked out a couple of new scenarios to do so. Looking at a few other things Atticus mentioned.

Trying to remember right now. Some kind of Vertical spread when you are in a very slow bull trend and the dropping IV and slow climb of the index, doesn´t allow for making any money in a Bull trend, using straight Calls. Man I am forgetful. Will have to check around and see what I can see. Unless somebody wants to chime in? :)
 
Just closed a couple of paper traded CALL trades. Made +$34 on one, which was 10% and the other made +$20, which was + 5%.

Couple of days in the trades. Trying out a different way of forecasting market direction. I need to make a lot more money than I´m doing.
 
Quote from falconview:

I am looking at some different things. Haven´t got far enough long on my looking though, to talk about it. Under certain conditions I can see where the Straddle will work.

Everything works under certain conditions :)


I´m still holding the 58 long straddle. I can go next week on that one, I think. The big cost in long straddles are the commissions.

The big cost in long straddles is the time decay (find a deep discount broker that charges less than a buck per contract).
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Well market has closed. My wall clock has quit working. Computer clock has a wierd time.

Still holding a CASH money, Long Straddle QQQ 58

Holding paper money
1 Spy Sept 134 Call
1 Sept. Strangle 59 QQQ
1 Sept QQQ CALL
1 Vertical Bull Call Spread, Sept. for debit of .67 cents

So will see how that works out next week.

TRYING TO PREDICT DIRECTION and then confirm what is the best way to trade a short BULL Trend.
 
My conclusions on LONG STRADDLES.

Trade 3 month away options.

Trade ONLY when expecting a BEAR TREND.

or TRADE WHEN EXPECTING AN EARNINGS REPORT IF USING STOCKS

Do NOT trade a bull trend with a long straddle. Only a BEAR TREND expectation.
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I´ve learned a lot about VOLATILITY and the effect on premium prices.
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I´ve traded IRON CONDORS before. Just figured out how to put on an ordinary CONDOR, which is sort of a LONG STRANGLE using Vertical Spreads. Have no idea yet, about WHEN and the use of this idea yet.
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Quote from falconview:

Have no idea yet, about WHEN and the use of this idea yet.
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Only after you have mastered WHEN , you will have arrived. Everything works WHEN. Nothing works WHEN not. It isn't a riddle.
 
Quote from falconview:

My conclusions on LONG STRADDLES.

Trade 3 month away options.

Trade ONLY when expecting a BEAR TREND.

or TRADE WHEN EXPECTING AN EARNINGS REPORT IF USING STOCKS

Do NOT trade a bull trend with a long straddle. Only a BEAR TREND expectation.
More...
Many of your conclusions are inconclusive.
 
Quote from falconview:

My conclusions on LONG STRADDLES.

Trade 3 month away options.

Trade ONLY when expecting a BEAR TREND.

or TRADE WHEN EXPECTING AN EARNINGS REPORT IF USING STOCKS

Do NOT trade a bull trend with a long straddle. Only a BEAR TREND expectation.
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More...

If you are only trading a bear trend then why would you trade something that is nondirectional vs. a directional trade? With a three month trade, you don't lose as much theta but you do give up gamma. Trading before earnings can be a good trade, the trick is to find the straddles that aren't pricing in the expected move. It still comes down to predicting a move in the stock/ volatility that the market doesn't see.
 
Iayyyyiii Dolemite!

Well skipping that helpful bucket of cold water thrown on me at this point ( grin ).

Would any contributors care to share those big volatile stocks, that they use the Long Straddle on, to trade earnings reports? The only one I know was contributed by Fortis Fortis. That was google

I´d like to have a list of stock candidates most favored and will start looking up the earnings report dates on the internet. Got to start someplace.
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Found I had a Vertical Spread calculator in my bookmarks. Having tried them before, without much success. I want to run some of this again. See how long it takes of a move to make them profitable. Think it is a fixed profit type thing?
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In the meantime, I`m working on my forecasting direction capability, for straight puts and calls. An amateurs refuge when everything else overwhelms the brain power.
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I can´t remember the reason for choosing a vertical bull or bear spread. Does it negate the THETA effect? Especially in a slow bull trend.
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Dolemite

Good question about the directional versus the non directional. I have already experienced the unexpected turnaround, at least in small trend runs, using the hourly charts. I´m gravitating to the daily and weekly charts now though. so, the straddle, or strangle is insurance against a market reversal. In the QQQ I´m finding that I need a movement of roughly 5 strikes to cover flutter, using hourly charts within a weekly bar chart, to get me the premium change over say, 3 strikes actual.

I´m in the process of turning to daily charts though, based on a weekly trend. Can´t say I have all the answers yet, but am identifying things to avoid at least. Wonder if we will get volatility next week, from the default.
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I was thinking how nice it is, this Saturday night, to have such a bunch of nice guys on this forum thread. Everybody is so helpful and cracking the odd joke now and then. What a difference to some of the other threads. This is definitely nice, warm cosy feeling. NOW I WILL GET FLAMED. :)
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