Showing posts with the label straddle-option


THE OPTIONS COURSE LONG SYNTHETIC STRADDLES One of my favorite delta neutral strategies is the long synthetic straddle. It  can be especially profitable because you can make adjustments as the  market moves to increase your return. In this kind of straddle, you are  combining options with stock; and as the market moves up or down, you  can make money both ways. Perhaps this seems like a magic trick, espe cially if you are short stock and long calls. Obviously one leg of the trade  will lose money as the other makes a profit. The difference between the  profit and loss determines how much you are going to be able to pocket  in profits with certain types of positions.  Many factors govern the  amount of profit, including the size of your account, the size of the trade,  and whether you can adjust the trade to put yourself back to delta neu tral after the market makes a move.  So, to review, there are at least three good reasons that a trader might  prefer a synthetic st