Straddle or strangle which one we should trade,

Which is a better strategy out of straddle and strangle ,and which one is better to execute.

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A Strangle generally uses Out of the Money Call/Puts. It is practiced generally during the start of expiry or significant time to expiry.

Short strangles are good to execute if the markets are likely to be  range bound to a larger extent. Short Straddles are practiced during near to expiry or when the markets are expected to trade in very small range.  More the market stays within the range more premium ends up at zero and the option writer benefits from that


Long Strangles are good execute if there is any big and sharp trends are expected. events like elections/ earning results are in near future where volatility or  trend breakout is expected.  One can play events using long straddles as well especially when expiry is nearing.


Answered on October 25, 2016.
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