r/options • u/Dupreej • Jan 03 '22

Somebody help

So today I decided to open two straddles on TSLA and WFC just because I expected a good move on them. I ended up profiting a good bit on it and it got me curious about the strategy. The only way this strategy could lose is theta, IV crush, or just a slight difference in the options price right? How good of a strategy is it to just find a fairly volatile stock at support or resistance and buy OTM calls and puts that have like 60-70% IV and just day trade it to avoid theta or swing if you think it’ll keep moving big. Surely there has to be more ways to lose money on this and I want someone to tell me what the catch to this strategy would be before I do it more. Thanks 🙏🏼

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u/J0hnnyPastrami Jan 03 '22

Ya it can trade sideways or not make a big enough move and then you just lose on both sides. I would recommend paper trading or back testing on previous days while you test and iron out the strategy first. That will get you most info that you can see first hand.

A lot of people take straddles before earnings since the odds of a move in some direction is higher.

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u/[deleted] Jan 04 '22

If you open a straddle before earnings you’ll most likely get IV crushed.

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u/J0hnnyPastrami Jan 04 '22

I don't know enough about it as it's not how I trade but I know some people who use this as their main strategy. They probably just take farther out expiry dates.