The layman isn't going to understand or spot the nuance or esoteric concept. It's the nature of things. He literally doesn't know what exposures are causing his wins and losses. Does it matter? Not until your knowledge level exceeds that of the individual that you're paying for advice. In D1 it doesn't matter. Risk-adjusted returns are all you should be worried about. The NVDA spread worked because the vol isn't going to drop pre-report. There is very little risk to the position because gamma is overwhelmed (locally) by "synthetic" time (vol). Practitioners will look at the straddle price as implied move in the underlying, post-earnings. That price will remain relatively stable and perhaps rise, even though theta is negative, because there is an assumption of a large move, post report. That assumption isn't going to change over a few days prior to the report. Look at the 250 straddle. Shares at 250. If the combo is trading at $12 on day one and $12 on day seven with shares at 250--the vol has to have rallied. Time has passed yet the straddle hasn't decayed and your delta position is unch.
Long straddle IS a non directional strategy. Here are some references from few well respected sources: The Best Non-Directional Options Trading Strategy in the Markets ... Straddle Options Trading - Options Buying Non Directional | Udemy Seeking Alpha With Long Straddles - Option Matters Straddles and Strangles: Non-Directional Option Strategies Non Directional Trading | Non Directional Options Trading How To Profit Trading Straddles | Benzinga Straddles and Strangles – RiskReversal I'm really surprised that you disputing this well known fact. I'm well familiar with all authors you mentioned, as well as Jeff Augen (read all his books), Russell Rhoads, Dan Passarelli and more. So let me say it one more time: Non directional trading refers to being delta neutral. Not gamma neutral or vega neutral. By definition, those strategies are much safer than taking a directional bet. Selling straddle is also non directional - as long as you sell the strike near the current price. Your trade started non directional but turned directional going into earnings once the stock moved. Yes, if you start directional and the stock moves, the trade becomes directional. Now the question is what you do. You can stay directional if you believe the stock will continue in the same direction (in case of long straddle). Or if you believe the stock will reverse in case of short straddle (which is what you did with your trade). Or you can hedge the delta with stock or options. Or in case of big move, you can book the gains and re position the whole trade.
The GOOGL Aug24 1200 straddle is non-directional? Non-directional trading refers to delta-neutral? How did you discretely-hedge that NVDA trade? Delta-neutrality doesn't exist. Each tick, passage of time, movement in vol...
That's my point. Your long straddle is also directional as soon as the stock moves. Unless you know how to pick stocks that stay perfectly still the whole time. Delta neutral ONLY the minute you buy it. You don't hedge deltas you just hold until prior to earnings. I feel like I am talking to a wall. You admitted I was right that the long straddle becomes directional if the stock moves. The stock moves after you buy your straddle this negating your delta neutrality. Now you are telling me that in your strategy you hedge your deltas as the stock moves???? Where is that in your strategy?
With the stock at 1223, the 1200 straddle is slightly bullish. For a 1200+ stock, this is not a big deal, but obviously 1225 would be completely delta neutral.
Yes, but many times if the stock moves enough, you can close the trade for a profit. The point is that I don't need to guess the direction. I can make money no matter which direction the stock moves.