Lesson Overview

Straddle Adjustments

Because short straddles have the same ATM put and call strike it's much harder to adjust these positions. Entering these trades will usually give you a very large credit which will naturally make your break-even points wide to begin with (and therefore room to wait it out during extended runs in the stock).

Should you have to make an adjustment with this type of a strategy you are ultimately going to create an inverted strangle position and it's important not to get too carried away with aggressive adjustments. Rather, you should focus on entering the trades at much higher levels of IV and managing your profits much quicker as implied volatility drops.

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  • Yes the deeper an option goes ITM the greater the risk of assignment early.

  • Depends on how much you get to roll up the other side. Sure that could be a good marker for adjusting.

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