Wednesday, 19 June 2013

SHORT STRANGLE STRATEGY

Components
Short one put option with a lower strike price and short one call option at a higher strike price.
Risk / Reward
Maximum Loss: Unlimited as the market moves in either direction.
Maximum Gain: Limited to the net premium received for selling the options....

Characteristics
When to use: When you are bearish on volatility and think market prices will remain stable.

A short strangle is similar to the Short Straddle except the strike prices are further apart, which lowers the premium received but also increases the chance of a profitable trade.

10 comments:

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    Replies
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  3. venugopal singh22 June 2013 at 10:36

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