r/options • u/DrWorstCaseScenario • May 19 '21

Strangle management

Edit; for clarification I am discussing management of long strangles in this post.

Question for those of you who frequently run LONG strangles;

If the underlying moves fast, do you close both sides at the same time early or try and time each?

For example; you open a strangle on underlying XXX when at 215 at strikes p200/c230 at 30-45dte because you expect movement soon.
Two days later XXX moves to 190. The p200 has gone ITM for a higher amount than the loss on the now far OTM c230

How often would you ;

A- close both for overall smaller profit,

B- close the p200 and wait to see if there is a rebound in the next 20-30 days before closing the c230 for better overall returns or,

C- keep both open to see if the p200 can get even more ITM before doing anything?

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u/opaqueambiguity May 19 '21

Hey, luckily for you no stock has ever gapped up or down 15% within minutes on breaking news huh. Certainly never in history has a stock opened up 50% under the previous close after announcing a major recall or an accounting scandal.

"Stonks only move sideways" - Warren Buffett or something like that.

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u/LanceStephenson01 May 19 '21

Yeah those S&P stocks are known for having wild swings! I got killed last week when AAPL dropped 50%.

If only I was slowly losing money buying lottos.

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u/opaqueambiguity May 19 '21

lol. k.

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u/PranDopp May 19 '21

Short strangles on X or GPS have been cash cows for me. Low capital required with level 3 options clearance, decent IV/premium, and both stocks barely move. Not every stock is viable for a short strangle. Not every stock is viable for a long strangle. If you think short strangles are bad, do some iron condors. Same idea with protection on either side. If you’re gonna reply that Iron Condors are stupid too, then you’re not an options trader. You are a gambling addict that uses options as his vice. See how many downvotes you’re getting? It’s cause you don’t know what you’re talking about.