Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (21363)	12/1/2000 12:47:12 PM
From: edamo	Respond to of 65232

dealie...."straddles" the only problem with a straddle is that you have to get a large enough move in either direction that would exceed the total of premiums paid to set the position....straddle basically is set with the same strike and expiration, a combination (strangle) would be with different strikes.......if the premiums are cheap, then that is a positive, it may be indicative of a rally... straddles typical are higher risk then strangles, but are also higher reward.... guess you are thinking that there will be an explosive move...one way or the other? a side ways market will kill you as time decays the premiums, as you have two clocks running against you!....max loss is if the stock ends up at the strike at expiration. simply put (or called) your bet is that the stock will move in the time period, an amount greater then the total of the premiums paid.