In this strategy workshop, Liz and Jenny explain the basics of a Straddle strategy. A Straddle is the simultaneous sell of a Call and Put option at the same strike to collect a credit.
You'll start by looking for a very liquid underlying that has high implied volatility rank (IV rank). Generally, we consider anything with an implied volatility rank of over 50% to be high.
When we trade Straddles we're hoping the implied volatility rank will contract, and the price of the underlying will remain relatively unchanged.
Typically, we will manage a Straddle more aggressively due to the larger credit received.