Which is better? Long Straddle or Long Strangle?

rew · Aug 30, 2011

Quote from osho67:

Will it be better for me to sell a strangle (on weekly ETFs) rather than selling a covered call (again weekly)? Comments appreciated.

Sure, if you want to buy more shares of the ETF if it gets cheap.

spindr0 · Aug 30, 2011

Quote from increasenow:

to me, seems way too much cash needed (margin) to actually sell a strangle with less profit potential than actually buy a long strangle?...

Margin is an issue but what makes the question silly is asking which is better, selling a naked put (equiv to CC) or selling a naked strangle? Apples and oranges: two very different risk graphs.

Or better yet, which is better, buying QQQ shares right now or shorting them? D'ya think what the market does going forward might have some relevance?

increasenow · Sep 2, 2011

Quote from spindr0:

Margin is an issue but what makes the question silly is asking which is better, selling a naked put (equiv to CC) or selling a naked strangle? Apples and oranges: two very different risk graphs.

Or better yet, which is better, buying QQQ shares right now or shorting them? D'ya think what the market does going forward might have some relevance?

I actually disagree with you here...if you sell a way out of the money strangle on the QQQ weekly for example...like 5 or so points below (put) and above (call) the current price level...it does not matter if it will go up or down as for the most 99.99% sure, the QQQ is not going to move that far in 3-4 days...the issue is again, having the HUGE margin required to make such trades...thus better to buy the long strangle...

spindr0 · Sep 2, 2011

Quote from increasenow:

I actually disagree with you here...if you sell a way out of the money strangle on the QQQ weekly for example...like 5 or so points below (put) and above (call) the current price level...it does not matter if it will go up or down as for the most 99.99% sure, the QQQ is not going to move that far in 3-4 days...the issue is again, having the HUGE margin required to make such trades...thus better to buy the long strangle...

I replied to osho67's question about selling a naked strangle versus selling a covered call and you disagree with me because it's better to buy a long staddle rather than a long strangle? Ummm, OK...

:eek:

increasenow · Sep 2, 2011

Quote from spindr0:

I replied to osho67's question about selling a naked strangle versus selling a covered call and you disagree with me because it's better to buy a long staddle rather than a long strangle? Ummm, OK... :eek:

ooops...sorry...but, my point still stands

ForexForex · Sep 2, 2011

Quote from increasenow:

Which is better? Long Straddle or Long Strangle? I used to think the Long Strangle was better but now I am thinking that the Long Straddle may actually be. Please share your thoughts and comments.

When it comes to the QQQ I would say a 1 Strike OTM Strangle is better. Much cheaper to enter position and the reward has the potential to be higher. During my August series of QQQ trades two of the five positions were strangles, with one of the strangles producing the highest return of the five trades - +173%

August 2011 QQQ Weekly Option Trades - Final Results

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I put the ELITE in EliteTrader

increasenow · Sep 3, 2011

Quote from ForexForex:

When it comes to the QQQ I would say a 1 Strike OTM Strangle is better. Much cheaper to enter position and the reward has the potential to be higher. During my August series of QQQ trades two of the five positions were strangles, with one of the strangles producing the highest return of the five trades - +173%

August 2011 QQQ Weekly Option Trades - Final Results

---------------------------------
I put the ELITE in EliteTrader

Are you still trading weekly options? Which ones and still strangles or outrights?

jamesbp · Sep 3, 2011

Quote from increasenow:

Which is better? Long Straddle or Long Strangle? I used to think the Long Strangle was better but now I am thinking that the Long Straddle may actually be. Please share your thoughts and comments.

The difference between a Long Straddle and Long Strangle is an Iron Fly .... Straddle + Fly = Strangle ..... so decide whether you want to sell the Iron Fly a the relevant strikes ...

Cheers
James

ForexForex · Sep 3, 2011

Quote from increasenow:

Are you still trading weekly options? Which ones and still strangles or outrights?

Yes, I'm still trading the QQQ weekly options, I'm going to limit the trades only to 1 strike OTM long calls, puts or strangles. My latest trade was on September 1, 2011, buying the 55 put for $0.41, selling for $0.58. Exited to early - if held one more day could have sold for about $1.60

Times in PST - For EST add three hours

I didn't compare a straddle and strangle but I'm fairly sure a QQQ 55P/56C strangle would have produced a higher return when compared to a QQQ 55 or 56 straddle on the 2.35% down move the QQQ made from Thursday to Friday.

---------------------------------
I put the ELITE in EliteTrader