Straddle option strategy is really a non-directional strategy. This means that you can make money without knowing where the market will move. It doesn't matter if it moves up or down, you can make money if it moves either way. calendar spread
The career is created by purchasing the exact same amount of call and put options with the exact same strike price and expires at the exact same time. There are two forms of Straddle, long straddle and short straddle. Long Straddle is created by purchasing an at the amount of money call option and a put option. The two choices are bought at the exact same strike price and expire at the exact same time. A quick Straddle is created by selling a put and a phone of the exact same stock, strike price and expiration date.
Long Straddle has unlimited profit and limited loss. While on Short Straddle the profit is limited by the premiums of the options. Short Straddle loss is unlimited if stock price comes up very high or planning to zero.
Straddles is frequently found in uncertainty like before an essential corporate announcement, earning announcement, or drug approval. When the news eventually happens, the purchase price will go up or down radically. Due to its characteristic, it is called a volatile option strategy. Another tip on buying Long Straddle is to buy it if it is in low volatility. The price is cheaper than when it's high volatility. When price is consolidating with an expectation that it will break out, it is the best time to Long Straddle. straddle option
Once you learn technical analysis, you can enter the long straddle position when it shows'triangle'or'wedge'formations. You can realize that the recent highs and lows are coming together. It's a signs of breakouts.
The straddle trade is a long time strategy. It may take anywhere from several days up to month, so you never need to view it every few hours.