Use which strike is closest to the index value and you look at it as a tool whenever you are analyzing strikes. It is just one of many tools to help you make strike selections. And yes a straddle is the Put and Call at the same strike price.
Just a general comment: I think each person has his/her own style/approach and one can make things as complicated or as simple as desired. However, one thing is for certain: more complicated does not mean more profitable. Basing strike selection on implied future market distribution levels (or a variance thereof) is perfectly acceptable IMVHO. After all, you could argue that the market knows much more than I do. I wouldn't know a moving average if it was luminous pink and ran me over. It should stop moving and causing so many accidents. I'll skip any poor comedy attempts pertinent to Fibonacci analysis for the moment as there are way too many lol. I know that the majority of contributors to this thread follow Phil's approach of using TA for strike selection and there is nothing wrong with that - look at the results. I just wanted people to be aware that it's possible to execute this strategy successfully with out that layer or using alternatives. Momoney. PS. VIX has just dipped so it's important to know how that impacts or rather what that is reflecting of the implied distributions etc. and how quickly things can change.
To add to the comments, my experience is to use as many tools as you can within reason and that you are comfortable with to make your decision so it is as well thought out as possible. Some of the tools that have been discussed are support and resistance lines, previous high/low points, chart patterns (triangles, H&S, wedges, etc.), 2x ATM SPX Straddle Price, Seasonal Trends, % Moves (i.e. 6% min on either side), FIB retracements, Moving averages, standard deviations, etc.... I would not recommend you use all of them at once since you will get a lot of noise but I use a few consistently PLUS my own experience and intuition gained from that experience. I think the simple fact that most of us rarely use the exact same strikes or spread distances shows that we are all relying on individual application of these tools. Worst thing you can do is blindly follow someone else's indicators because you will have no idea what thought process went into it and might not realize it if an indicator is contra your trading or risk management style. If you like an approach that study it for yourself to tailor it more to your needs and that is how you design a "system" for yourself.
So, when does the SET usually come out? Noon-ish? I put a last minute trade on yesterday; did a bull debit spread at 1260/1265 for a debit of $4 for 10 contracts. That'll be a nice $1000 holiday gift if the SET is above 1265 (which I think it will be given this morning's strong opening). But you never know w/ that crazy SET!
I also grabbed the 1270 straddle for $6.20 so I am waiting for the SET myself. How did you get the 1260/1265 spread for $4.00? Great fill in my opinion....and great profit since SET is guaranteed to be higher..
No idea; I was playing around w/ "can't lose" trades just to see what would happen. I'd entered one for the 1255/1260 @ 4 as well just to see what would happen (needless to say, that didn't work). I was stunned when I saw that my 1260/65 actually got filled at 4 (at around 3pm). Of course, then I started to convince myself that the market would tank and close below 1265. But, I figured-- worst case I lose $4k. It was an interesting (and hopefully profitable) experiment; much like your straddle play. BTW, when you said that the "SET is guaranteed to be higher"-- what did you mean by that? I scrared myself last night by looking at thte SET vs closing values spreadsheet that was posted; there were 20 times when the SET closed > 5 handles below the previous close!
I like this idea...Although I said I wouldn't..I lied:eek: and opened the put side of Jan a week ago tue1225/20...market made me an offer I couldn't refuse ....also my main reason is in the past 8 years there is only one year (the big bear 01/02) that Jan was lower than Dec and if that happens this year I'm all cash and you won't hear from me the rest of the year...ANYWAY opened a bear call yesterday (to beat the rush) for 1325/1335...very female reason a nice even 100 pt spread . sooooo using your idea for buying a hedge... that's also is a nice even 20 pts away from my shorts at 1245 for the put and 1305 for the call...probablility of TOUCHING those strikes is %48 and 37% which means at some point watching the market I could profit on both sides. Cost about $9 for both. Question Arb or coach...as a hedge obviously I can't affort the same number of contracts so I'm thinking I'll just try a 1:5 or is that sufficient?