Trading Long Straddles

Quote from falconview:

Having failed at credit spread trading, Gap trading and straight buying of options. I´m now trying LONG STRADDLES in options. Got one week in it now, but probably run through the month. Any body got any advice on making money with lONG STRADDLES?
:D
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making money is a serious endeavor. get rid of that stupid smiley.
 
Fortis Fortis

You will be pleased to note that your recommended trade was closed with a gain of 7% net profit. Real Money, albeit it was scared money and not very much.

My Aug 127 straddle is losing money right now, but no hurry on that and I have shopping errands to run. That is paper money, so it doesn´t matter.

Took an August 128 CALL anyway in paper trading, in SPY, that can wait until next week. Rest of the day I´m off this week. Catch up on things that have to be done.
 
Quote from falconview:

Reading a bit on Long Straddles. Seems in a 1 month to 2 month straddle buying system. If you apply this money management rule, you boost your profits overall.

1) Close STRADDLE after it loses 10% of the spread value.

2) Let gaining Straddle run.
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Is that an absolute 10% stop or a trailing stop?

Do you have a link for this strategy?
 
Sorry Eliot

It was a University study done on about 250 trades. It showed the account profit for long straddles, nearly doubling if you applied this modest simple money management rule, of dropping long straddles that had lost 10%. It didn´t go into a lot of detail, but I ran across it on the internet.

Regarding the late week trade recommended by Forex Forex, it was only 2 contracts and made $38, but I notice my CASH ACCOUNT balance only went up $14. Bit expensive what? Almost 2/3 went to expenses.

I just made up a record scrap paper to compare Implied Volatility averaged for a Long Straddle, and the Long Straddle Spread cost and see what correlation if any might be there, for the best time to enter a Long Straddle. Trend turns, middle trend, or what? Anybody done any such studies, or know of any? I´m talking very short trends here of one day, or two days during the week. Usually a WEEKLY bar will move a fair distance, perhaps two strikes sometime during the week, which should be enough to make a Long Straddle profitable. Thats my theory anyway.
 
As a novice, I´m sitting on a Sunday afternoon, mulling over some ideas with trading the Long Straddle. I´m only a little wiser in this business, but one of my ideas was to compare in the QQQ, the difference between the bid and ask of a straddle and a strangle. The difference was 5 cents for the straddle, not right on the ATM. and 9 cents for the strangle.

My question is for the experienced long straddle traders, is how much with a limit order to be filled for either the straddle, or the strangle, how much could you shave off in cents on your limit order and still have the expectation of getting FILLED?
 
Monday morning early. Been comparing prices with qqq and spy. Looks like I will trade the QQQ this week instead of the SPY.

Prices are lower.

I think I have worked out a trading strategy in long straddles. Now to test it this week in paper trading.
 
I don´t know why I can´t copy from Elite Trader?

Anyway, Forex Forex told me to add 1 cent to a limit order back some time ago. When buying the ITM STRANGLE are 5 Cents for the Market Maker Spread in QQQ. Why I cannot picture this in my mind I don´t know? But when in TOS you pull up the STRANGLE order you get their suggested limit order spread price. You are saying add 1 cent to that number and change their quoted spread price, by adding 1 cent. When you sell by the same closing spread limit order, you SUBTRACT 1 cent, changing their posted thingy for your order to close.

Have I got that right?
 
Forex Forex

I have a long straddle in paper trading on. But I figure I should put one also in CASH. Since my cash is low, I´m a bit nervous about it. Kinda would like your opinion. This is Wednesday morning as I write this and I believe Friday is an Earnings Report, which should be a volatility balloon. Also the IV and HV are almost together now and I expect the IV will move below the HV today. As I recollect my reading, the time for a long straddle is also when IV is below HV.
 
I forget who told me about wishing to know more about Volatility.

I´m tracking the GREEKS this week as well. to learn. Anyway, I am tracking the Long Straddle in the 56 QQQ strike straddle. It is educational to watch. The Average of the two sides of the straddle IV numbers, divided by two, gives me an average IV number. Which has been dropping since Monday. Since I´ve been doing it, has gone down from an average for the straddle of 19.23 down to 17.65.
Alternatively, I have been checking with the ISE Implied volatility numbers and the Historical Volatility( yesterdays they say ) number. Subtracting them. The IV started on Monday above the HV, I think I had it around a number of + 97 above the HV. This midday Wednesday it has continued to drop and now has gone this morning below the HV and is now down to - 1.14.
Not sure where I read that, but a Long Straddle is best put on as a volatility play, when IV is below HV. So that is the case right now. don´t know what to do about that yet? Waiting for a contribution on here from somebody more experienced. Still I suppose if I sit it out, I will learn through the weekend.
In the DMI indicator, the DX line has already crossed over the rising ADX line, so that is marking a TOP for this trend. Will probably figure it out more slowly, by just watching over the weekend and see if my learning is confirmed on the Volatility expectations and premium for the QQQ 56 straddle increasing Friday.
 
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