Straddle option strategy is really a non-directional strategy. Which means you may make money without knowing where the market will move. It doesn't matter if it moves up or down, you may make money if it moves either way. implied volatility
The career is developed by purchasing exactly the same number of call and put options with exactly the same strike price and expires at exactly the same time. You can find two types of Straddle, long straddle and short straddle. Long Straddle is developed by purchasing an at the cash call option and a put option. The two options are bought at exactly the same strike price and expire at exactly the same time. A brief Straddle is developed by selling a put and a phone of exactly the same stock, strike price and expiration date.
Long Straddle has unlimited profit and limited loss. While on Short Straddle the profit is limited to the premiums of the options. Short Straddle loss is unlimited if stock price comes up very good or planning to zero.
Straddles is usually found in uncertainty like before a significant corporate announcement, earning announcement, or drug approval. When the news eventually arrives, the price will go up or down radically. Due to the characteristic, it is known as a volatile option strategy. Another tip on buying Long Straddle is to purchase it when it is in low volatility. The price is cheaper than when it has high volatility. When price is consolidating having an expectation that it will break out, it is the better time to Long Straddle. calendar spread
Knowing technical analysis, you can enter the long straddle position when it shows'triangle'or'wedge'formations. You can observe that the recent highs and lows are coming together. It's a signs of breakouts.
The straddle trade is quite a while strategy. It may take anywhere from several days up to and including month, so that you don't need to view it every few hours.