How to take profits from a straddle position?

Discussion in 'Options' started by LucasX, Nov 19, 2009.

  1. LucasX


    Market right now is down and my straddle is ITM. What's the best way to exit tomorrow or protect this winning trade? Suppose I don't want to trade underlying and hence there is no gamma scalping.

    Any comments are welcome!
  2. spindr0


    What you do going forward depends on what you think/hope the underlying might do.

    There's nothing wrong with taking a profit now, particularly if you think the current move is extended.

    If you think that the underlying will continue to move, roll the winning side out a strike to book its gains (creating a strangle).

    Sometimes it's possible to convert a leg to a spread but its viability depends on the month, strike and available premium.

    Everything depends on your current outlook. Pretend it's a new trade. What would you do today? When you answer that, convert the original straddle to the new position.