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How Directional Moves Affect P/L

Everyday Trader

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Mike & Ryan walk through a visual example of a strangle & ratio spread, and how each may be affected by directional moves from a P/L standpoint.

Even when the strangle is OTM, it can experience big swings in P/L based on implied volatility changes, and the stock's proximity to the strikes.

The ratio spread must be closer to expiration to see any real max profit values, but we route them for a credit which opens up a whole new world of opportunity!

Tune in for a great discussion!

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