Trading Long Straddles

Discussion in 'Options' started by falconview, Jun 13, 2011.

  1. Having failed at credit spread trading, Gap trading and straight buying of options. I´m now trying LONG STRADDLES in options. Got one week in it now, but probably run through the month. Any body got any advice on making money with lONG STRADDLES?
  2. buy low, sell high :)
    implied volatility can be thought as the price of straddle, dont buy when it is too high, dont unload your straddle when IV is too low.

    Long straddles will suffer from theta decay (straddle value will erode everyday without significant UL movement. ).

    when you got lucky and UL moves somewhere and you got in profit, don't let your profit decay. lock some profit by a technique called gamma scalping

    good luck
  3. rmorse

    rmorse ET Sponsor

    Rather than randomly selling or buying straddles, I look for opportunities on both sides. For buying there should not only be a catalyst, but also pricing that does not take that into account. For selling opportunities, look for vol. pricing higher than actual current vol, with little or no up coming catalyst. I like to do both.

    In general, I find traders that only look for selling opportunities do better over time.

    Just my opinion....
  4. Why not just stick to trading the underlying? If you couldn't make money trading credit spreads, why would you expect to do better trading something riskier?
  5. Last year I traded credit spreads for about 8 months. Got wiped out twice. It was paper momey.
  6. About 25 years ago, I made note of a strategy, trading Long Option Straddles. Since I am currently out of idea, I was re reading my notes. Somebody back long ago had what they said was a long option straddle method that worked.
    So I am trying it in paper money. 25 years ago they did not have the internet resources, charting and paper money trading they have today. Just got one week at it, too soon to tell anything, but will see by the end of the month. In the meantime, I have heard sporadically of people making, or losing oodles of money trading long option straddles. So just wondered if there was any body out there successful at it?
  7. rmorse

    rmorse ET Sponsor

    Not that I've ever met.....
  8. Take a look at GLD:

    • Weekly options offered.
    • Consider entering 1 day before expiry, buy Thursday sell Friday.
    • Debt will only be about $0.80.
    • You don't pay for any time premium.
    • I believe a small movement of 1.5% or more will do the trick.
    • The trade is over quickly, no spending a few days watching it.
    • Try a paper trade this Thursday to see how it works out.

    GOOG and QQQ could be considered also.
  9. LOL, no kidding. If someone doesn't know what they're doing, at least use a strategy that will lose your money slowly. Oops, I think I just gave away the secret that gurus charge $3500 per weekend to learn.
  10. That somebody "back long ago" was probably me. It was not so long ago it was in 2008. One month is the wrong timeframe to go into a straddle unless you are telling us that your straddle position is one that involves a stock which has an earnings announcement this month. Always remember straddles are speculative trades and not income. So getting a straddle right is like being a sniper. You have to aim good and then shoot.
    I am successful at it but it took months of trial and error.
    #10     Jun 13, 2011