I need advice VNDA (Vanda Pharmaceuticals Inc) IV is really high today is 474 % , so i choose to use short strangle and expiry on Nov13 because FDA announcement approx on nov 14. I attach a risk profile for my short strangle strategy my plan is, I'm going to entry short strangle on nov 11 and exit on nov 15 at expiration date. can anybody give the opinion. thanks
The danger with that is that you make money. Then you'll keep doing it. Then one day it blows you out of the water. If you feel absolutely compelled. Try to do an Iron Condor to control your risk/reward. Still, I don't think most long surviving options traders play with those volatility levels. Remember this: The odds eventually even out over the long term. So, ask yourself how this trade can bite you in the rear. Then ask, what if your first trade on this issue becomes a bite to the rear?