The Best 10 Option Trading Strategies

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3. Straddle

Straddles can earn money no matter the security price goes up or down. This strategy is established by buying near the money call and put option at the same strike price. The disadvantage of this strategy is the high breakeven level. The sum of the call and put option ask price is the breakeven level of this strategy. You only generate profit when the security price has gone up or down more than the breakeven level. If the security price fluctuates within the upside and downside breakeven level, you still lose money.
The money that you lose is due to the depreciation of the option time value. This strategy is usually applied for security, which has high volatility, or before the release of the earnings report. The maximum loss of this strategy is the total amount of call and put option price. This strategy can generate unlimited profit at either side of the market direction.

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