To The Moon

In the last post, we looked at how to profit from sideways markets by selling straddles and strangles—earning money from the passage of time.

Now that you know how the P/L works, what other details should you be aware of before trading?

📘 Let’s hear what The Options Handbook says—

▶ Quick Recap: What Are Straddles and Strangles? 🔄

• Short Straddle: Sell a call and a put at the same strike price on the same expiration date.

• Short Strangle: Sell a call and a put at different strike prices on the same expiration date.

The core idea of both strategies is predicting that the stock will remain relatively stable, and selling options to earn the premiums.

▶ Why some traders love them: 💡

• You earn from both sides: call and put premiums.

• You profit from time decay, not price moves.

• You don't need to predict direction, just low volatility.

▶ Where’s the Risk? ⚠️

• Unlimited risk on big moves, especially on the call side.

• Requires significant margin and risk management.

• You can lose big if volatility spikes or news breaks.

▶ Is This Strategy Right for You? 🎯

• If you’re an experienced trader with sufficient capital, you can consider short straddles or strangles.

• If you think the stock will barely move, a straddle gives you more premium, but a smaller range for profit.

• If you expect mild fluctuations, a strangle gives you a wider buffer, but less upfront income.

Either way, you're trading time for cash, and you'd better be confident the market won't surprise you.

💡 The Options Handbook also includes P/L charts for both strategies—clear at a glance. Now available in the Tiger Coin Center! 🐯

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>> Click here for the Simplified Chinese version <<