|
PureBytes Links
Trading Reference Links
|
Anytime you sell options you are risking taking a big hit. A strangle is just
a straddle with strikes further apart (as opposed to the same in the
staddle). Because the strikes are further apart people think that they are
safer (especially with very wide stangles). The risk is that as the market
moves in one direction for a while you feel you can just safely cover the
side going bad. At this point if the market makes a large move in the other
direction, you are doubly screwed - once for your short option side , one for
your underlying hedge.
|