Combination of straddles and strangles.

Discussion in 'Forex' started by Eric1977, Jun 29, 2007.

  1. Eric1977


    I'm thinking about some combination of straddles and strangles on forex plain vanilla options to stay delta neutral and pick up positive theta. I realize that selling strangles alone is not recommended on these options. Can someone comment on the following strategy.

    Sell an at the money straddle one month out, buy an at the money straddle 2 weeks out and after 2 weeks, either close the short straddle or leave it on. Assuming that I know how to adjust these positions based on the movement of the underlying, is this a reasonable strategy to pick up theta without taking too large of a risk?

    Is the above example the same as selling a straddle 2-weeks out? (I just realized that now).

    Any comments will be helpful, but I'm looking for sophisticated positions.