So you would put the straddle at the target price for the move? Or would you wait for the stock to move then put it on?
No, you would want to sell the straddle after you bought the stock. The premiums will be juiced because of the selloff in the stock. If he is right and he gets a bounce, he will make money on his long deltas, his long theta, and his short vega because they will take the juice out of his options once the stock recovers. He can sell the straddle one strike up too to get a better skew. Hell, he doesn't even have to buy the stock, he can just sell the straddle if he wants a strike above the market. It will have the same risk profile as if he bought the same number of underlying shares.