Build a Short Straddle Strategy
What is a short straddle?
NeutralLimited ProfitUnlimited Loss
The opposite of a long straddle. This strategy makes good income since a put and call are being sold, but requires minimal stock movement as the max loss is uncapped in both directions.
Time is beneficial for this strategy as both options will decay and become cheaper to buy back, but since there is unlimited risk you also don't want to be exposed for too long.
- Sell a put at strike A
- Sell a call at strike A