Hello, Does anyone use any Long directional strategies or Long Straddles? If so, any hints or suggestions? Thanks
straddles and strangles are volatility plays. what are you trying to do here? can you give an example of how you want to use the trade?
My suggestion is to re-think your process. If you decide that you want to enter an option strategy from the side of the strategy, I would say that is backwards. Examine stocks, indexes, futures etc. Come up with a thesis on what you expect that symbol will do or not do, over a defined time period. Then examine option prices to determine which option strategy, or combination of strategies gives your the highest odd of success for your risk tolerance. Before entering the position, be mindful of the current and typical depth and liquidity of that symbol. Wide/thin option markets have an extra cost when you enter and exit your position so you have to be right more often. IMO, if you start with, "I want to buy a straddle", you will have the mindset to do something when doing nothing is best.
One idea I'm working on now is trading the underlying and shorting weekly options as a partial hedge on a semi-directional trade using technical and statistical analysis. My idea is to lower the overall delta of an outright trade and attempt to capture the rapid theta decay in the option's final week of life. I am willing to initiate a trade like this on a wide variety of delta scenarios based on my perception of potential directionality and risk of the trade. My net delta range will probably be from .1 to .7. My stop and trade management are based on my delta, intraday S/R, and open of the day based statistics. Note: I may "leg" in and out of this kind of trade.
I'm still a Reg-T kind of guy. This is a new strategy for me and will initially be based on spy and its options.
Long straddles are useful if you have the ability to find securities that will make a sharp move in price in either direction before expiration. If you don't have that ability then, not so much.