LD Lossdog Research
strategy

Straddle or Strangle

2 matching records.

Trade idea

Jade Lizard Straddle or Strangle

The speaker suggests selling a call that's two or three strikes out of the money and buying a call that's 20, 25 strikes higher, while also selling a media put. The idea is to profit from the spread between the call and put, with the market expected to trade within a certain range. The strategy is designed to capture the premium while limiting risk.

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StrategyStraddle or Strangle
AssetEquity
ExpirationNot specified
Time horizonShort-term, likely within a few days
Entry / triggerMarket is expected to trade within a certain range
Target / exitProfit from the spread between the call and put
Invalidation / stopIf the market moves significantly outside the expected range
SpeakerSpeaker
Structure / legs
  • Sell a call that's two or three strikes out of the money
  • Buy a call that's 20, 25 strikes higher
  • Sell a media put (likely a put with a 25 delta)
Risks
  • Market volatility could lead to losses if the price moves significantly outside the expected range
  • The spread between the call and put may not be sufficient to cover the cost of the trade
  • The market may not trade within the expected range, leading to a loss
Long CallequityJade LizardStraddle or Strangle
high confidenceVerify in video at 55:33 ↗
Trade idea

Trade idea Straddle or Strangle

The speaker suggests that stocks with an IVR above 50 often have earnings on the calendar, which can introduce event risk. However, they also mention that buying the back month and selling the front month can be a strategy to capitalize on higher implied volatility before earnings. This strategy is recommended for traders who are not directionally biased and are looking to take advantage of the volatility spike before earnings. The thesis is based on the idea that the front month has higher implied volatility than the back month, and the trader can profit from the difference by selling the front month and buying the back month.

View full notes
StrategyStraddle or Strangle
Time horizonShort-term (pre-earnings)
Entry / triggerHigh IVR stocks with earnings on the calendar
Invalidation / stopEarnings event or significant price movement
SpeakerUnknown
Risks
  • Event risk
  • Volatility decay
  • Liquidity issues
Straddle or Strangle
high confidenceVerify in video at 24:35 ↗