When a strangle for example is tested we have mechanical steps we will take to defend the position. First we will roll up the untested side to collect additional credit. If there is little duration left in the cycle we will roll out in time. The final step we will take in the mechanical defense is to take the position and go inverted.
Inversion in the example of a strangle is when untested side is rolled beyond the tested side. By going inverted we collect additional premium and adjust our deltas. If you like to learn more check out today’s show!