The exact opposite of buying strangles! In this case, the investor sells an OTM call and OTM put. Let's take a look at the graph: As mentioned earlier, in the selling straddle post, when we sell a put we profit when the price is above the break even price (strike-premium sold) and when we sell a call we profit when the price is below the break even price (strike-premium sold). The profits and losses for selling a strangle are as follows:
Price is above the put break even price and below the call break price: Profit! Maximized at premium collected from both sales When the price is not in the aforementioned range: Loss is unlimited Advanced Tips:
1 Comment
1/14/2019 07:02:49 pm
If your heart and your mind are not really passionate in terms of studying stock market and strategies associated with that, it’s more likely for you to fail. I don’t like the idea that there are people trying to venture into stock market, yet they are not making a way to understand it. It’s like a student who wants to top the class yet he doesn’t make an effort to study at all! On the other hand, I want to thank you for all the advices you mentioned earlier. I made sure that everything was noted! I want to enter the world of stock market if I know I am ready for it!
Reply
Leave a Reply. |
NishaNinteen year-old trader, future connoisseur of options. Follow me on Twitter!
@nishatrades Archives
November 2020
Categories
All
|