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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 687.70+0.7%4:00 PM EST
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To: Fintas who wrote (44570)1/25/2013 4:19:15 AM
From: Vendit™  Read Replies (1) of 221309
 
Especially if they are buying or selling at the same time.

I believe that is called a straddle options strategy.

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Straddles are a good strategy to pursue if an investor believes that a stock's price will move significantly, but is unsure as to which direction. The stock price must move significantly if the investor is to make a profit. As shown in the diagram above, should only a small movement in price occur in either direction, the investor will experience a loss. As a result, a straddle is extremely risky to perform. Additionally, on stocks that are expected to jump, the market tends to price options at a higher premium, which ultimately reduces the expected payoff should the stock move significantly
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