Tuesday 11 June 2013

LONG STRANGLE STRATEGY

Components
Long one put option with a lower strike price and long one call option at a higher strike price.
Risk / Reward
Maximum Loss: Limited to the total premium paid for the call and put options.
Maximum Gain: Unlimited as the market moves in either direction.
Characteristics
When to use: When you are bullish on volatility but are unsure of market direction....