Short Straddle
A short straddle is a multi-leg, neutral strategy with undefined-risk and limited profit potential. Short straddles have no directional bias and capitalize on a decrease in volatility and minimal movement from the underlying stock.
Kirk Du Plessis
Apr 19, 2021
Short straddles are aggressive premium selling strategies where you sell both the ATM call and ATM put option at the same strike price with the same expiration date. This maximizes the credit received and is best used with ultra-high IV stocks. Because of the undefined risk nature of this strategy, it's best to use this sparingly (again only with great setups). We will only trade 1 to 2 straddles in our overall portfolio at a time. Profit taking on this strategy is much quicker and you'll look to close out winning trades at 25-50% of max profit to conserve capital.
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