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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (158397)	1/18/2003 10:10:18 PM
From: i-node	Read Replies (1) \| Respond to of 1573135

Sort of but the specific point is he is betting on a big move. He loses if there is no big move. You overhear a conversation in which a company is going to have a HUGE, EARTH SHATTERING news release, and the participants are sure the news will have a major effect on the price of the stock. But, unfortunately, you miss the part about whether it is good news or bad news. The stock's going to move, but you don't know which way. It's time for the straddle, or strangle as you called it... The problem, of course, is that there is a ton of risk in buying calls and puts in the first place, and you effectively double the amount of exposure you have as there are premiums in both positions, and only one is likely to pay. Only a couple of times, years ago, did I try these. It seems like it takes a really, really big move to make it pay.