Strangle options are low risk but high profit option trading strategies. Anyone can make huge profit once the stock moves in one direction or the other. The good thing about this strategy is that they can make money wherever which the direction of the option goes. However, strangle options tend to struck out of money thus a long strangle is preferred because it is cheaper than long straddle. But this requires larger move in the earlier to be profitable. Some option systems offer comprehensive and easy to use straddle and strangle option trading strategy that can be used by both professional and beginner trader. By combining effective strategies and powerful strangle options, anyone can make huge profits from their trades.
If you are a newbie and you are not familiar with the terminologies used in stock market, then you should start by knowing what is straddle and strangle options. Basically, a straddle is when you bet on both sides of the trades using trading options that have the same strike price and the same expiration date. Strangle options on the other hand has the basic goal like the straddle but its strategy and the way it works is slightly different. The basic factor that makes the strangle options better than straddle is it’s cheap. It lowers your cost on the trade.
In strangle options, you buy a put and a call option with the same prices at or near the current share prices. They involve buying a call and out at different out-of-the-money strike prices. So when is the best time to use strangle options and which stocks to use them? Since the underlying stock must work harder in order to make you money in strangle, you must use the strategy wisely. Be sure to employ it on stocks that have huge volatility, both up and down. This way, your profitability is high. In the current market, strangle option function well on financial-based shares, and technology sector share.
You do not use strangle options on stodgy healthcare stocks or other traditionally stable utility companies because you are likely to lose much. But you can use the strategy on broader stock market thru index options on the Nasdaq, Dow, or S&P 500. With all these being said, you should be able to know now when to use strangle options and where to employ them. It is really hard to predict stock movements as they can move erratically and can go any direction. But even if this is the case, remember that the right moves and strangle options decision can make you big money eventually.
The best tip is to study the stock’s movement and use strangle options the best possible way. If you know how to employ it at the right time, expect to gain massive profits. Don’t ever feel that you can’t do anything to change your fate in stock trading. It is only you that can make success happen. Use strangle options wisely and you are way to gaining huge profits.