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LONG STRAngLE

LONG STRAngLE. Strategy Name: Long Strangle Direction: Neutral Max. Risk: Capped Type: Capital Gain Volatility: High Max. Reward: Un Capped Proficiency: Intermediate. Legs: Buy OTM SP C Calls Buy OTM SP P Puts Entry:

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LONG STRAngLE

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  1. LONG STRAngLE

  2. Strategy Name:Long Strangle Direction:Neutral Max. Risk:Capped Type: Capital Gain Volatility: High Max. Reward: Un Capped Proficiency: Intermediate • Legs: • Buy OTM SPC Calls • Buy OTM SPP Puts • Entry: • Buy OTM options which are having long time to expiration. • Try to concentrate on stocks with news events and earnings reports about to happen within two weeks.

  3. Risk Profile: Net debit: call premium+ Put premium Max. Risk: Net Debit Max. Reward: Uncapped BEDown: {Strike price – Net Debit} BEUp : {Strike price+ Net Debit} Investment: Net Debit ROI: Profit/Investment

  4. Exit: • Sell the calls and put which you had bought earlier. • Exit either few days after the news event occurs where there is no movement or where there has been profitable movement. • Try to avoid holding into the last month, otherwise, you will be exposed to serious time decay.

  5. Example: Month Long/Short Option Call/Future/Put Price Qty Nov Long 5500 Put 5 1000 Nov Long 5800 Call 20 1000

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