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Long Straddles

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

Long straddles seem attractive at first because of their unlimited profit potential and limited loss. However, due to their probabilistic nature of being priced larger than their historical actual moves, the long straddle actually underperforms over the time.

This suggests that even though long straddles are a cheap way to get omnidirectional exposure, one must be careful at employing them a lot, especially in high IV environments.

Tune in as Tom and Tony walk through all of the details of this strategy!

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