[ The Warlock Casts - Strangle ] A Learning Session
Hey folks. Here I am again, a few beers down. My daughter is sleeping soundly, so is my wife. So I'll spend some time with you all.
Let's talk strangles.
Confidence and Uncertainty - say whaaaa!?!?
Yep, you heard it here. These two seemingly opposing factors can actually be a strategy.
Here's an example:
[Confidence] Market Volitility index is high: Therefore big swings are going to happen to ETFs like SPY.
[Uncertainty] I have no idea what the news may be or how market makers may make their decision.
How do we play this to ensure we make some tendies even when one option becomes completely worthless?
You think SPY is about to go absolutely bonkers, but you don't know if it's mooning or dumping. So, you make a degenerate bet on pure chaos.
The Play:
OOTM CALLS && OOTM PUTS
The Play:
OOTM CALLS && OOTM PUTS
Consider a factor of influence based on your insight on the market trajectory:
I may do 60% call , 40% put because I want my calls to do better and I'm confident it'll moon. (vice versa) the opposite play, of the market moves enough will STILL cover you!!
Why you doin' this, degenerate?
You need SPY to make a move, fast. If it explodes up, your Call prints so many tendies it covers the cost of both and then some. If it dumps like a crypto scam, your Put explodes and you get rich. One side dies, the other side makes you a legend.
The Risk:
If SPY just chills and doesn't move much, both options go to zero, and you lose everything you put in. Max pain.
You need SPY to make a move, fast. If it explodes up, your Call prints so many tendies it covers the cost of both and then some. If it dumps like a crypto scam, your Put explodes and you get rich. One side dies, the other side makes you a legend.
The Risk:
If SPY just chills and doesn't move much, both options go to zero, and you lose everything you put in. Max pain.
It's a high-risk, high-reward play for pure volatility. Go forth and potentially print, or create epic loss porn.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Data Engineer (FAANG) & degenerate SPY trader. Now a father to a beautiful daughter, gotta make some tendies for her LFG
4634
Followers
2
Following
15K
Visitors
Follow
The Warlock OP : these bemusings of a madman are not financial advice. There is an art to understanding volume, outflows, gaps etc.
But, then again, fuck all that.
the big leek : I like to trade with both long and short positions, but this strategy is afraid of sideways markets.
worst trader : I think there will be a sell off in the morning, retail traders getting out ect. there is a little gap to fill on the down side. but by end of the day things could turn around. and knowing trump he'll probably get on the horn and say something positive about tariffs and we moon lol
The Warlock OP the big leek : this strategy should be applied to highly liquid ETFs when it's volitility index is VERY high
The Warlock OP worst trader : you are just describing intraday volitility. my favorite. I take profit on whatever the opening bell provides and then wait and see if my opposite strangle will also profit.
worst trader The Warlock OP : I got puts with 580 strike, so that's what I'm praying for lol