Re: [RT] Straddle SPX DE?

["Dom Perrino" <domenick@xxxxxxxxxxxx>]

If you BUY a straddle(a put option and call option 
on the same instrument and same strike price) your cost will be the total of the 
put and call option cost e.g.strike price is 100 . cost of put and call is $ 
6.00  you will start being profitable if instrument goes above 106 (call) 
and $ 94.00 (put). You need volatility otherwise you will not be making money if 
the instrument you pick has a low volatility.
On the other hand if you SELL a straddle you sell 
(write) the call and put and pocket the premium, in that case you want to pick 
an instrument that has a low  volatility so that there is little movement 
in the instrument and you get to keep the premiums.This is a basic simple 
example that i hope will be of some help.
<FONT face=Arial 
size=2>Dom                                                                             
----- Original Message ----- 
<BLOCKQUOTE 
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  John Corrion 
  
  To: <A 
  href="mailto:realtraders@xxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxx>realtraders@xxxxxxxxxxx 
  Sent: Sunday, October 29, 2000 9:45 
  PM
  Subject: [RT] Straddle SPX DE?
  Hi Guys, 
  Are any of you out there experienced with straddles and can possibly 
  educate me? I was looking to do a straddle for the DE SPX and have been told 
  that I should be buying volatility but really don't know and don't fully 
  understand the option software.  Any guidance? 
  Thanks, 
  John To 
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