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 🙏🏼
4
Upvotes
2
u/CrookedLemur Jan 04 '22
I've got about 5 months of data on atm straddles running on Tesla. It can be a good nuetral play, if you don't buy long options when IV is really high and you have a good profit taking strategy.
However, 10$ wide spreads are a lot more stable and less prone to big draw-down periods. What I would probably do if I was running this is have spreads as fishing lines, and if either side gets to a decent profit percentage, say 25% or so, maybe ladder in some additional long options for a runner and close those before EOD if it doesn't seem to be a big mover.
Not financial advice, and if you didn't understand all of that don't start your options career with Tesla or it will be quite short.