A Twist on a Theme
I’m trying to keep the spark alive with ideas that people may not have considered. I have this week, opted for an ‘equal premium’ strangle. This produces a much lower strike put of course. It is vitally important to understand the position. I have deliberately left in something* that should not be there-hope you can spot it
Diligence- It is Vital
How many traders have come unstuck when they look back and say” Oops I didn’t see that”? So what we are looking at is our Greeks. Delta- we are negative 0.11 with the calls and double negative(positive) 0.059 with the puts. So roughly we are negative 0.05 Delta. Theta, combined 1.45±. It’s a pretty neutral position with a tiny bias. Strikes are ok based on recent market action. What if you went all ‘delta neutral’? You could sell roughly twice as many puts. There is no reason to enter the trade in one hit. There is no reason to accept credit of 9 to each side. So many variables, but it’s vital to have a plan.
Strangles- Do They Work?
The key is knowing how to handle the trades when they go wrong. And they will. But rarely. We have looked at 1 sigma strangles over the last few years, and yes there were profits, and yes there were some big hits. A trader of options will have a number of choices,unlike directional futures/forex etc.
Risk/Reward
Probably looking at margin of ‘about’ £1200 to take in £180, with 26 days to expiry.Risk at 6807 and 7568. Chart courtesy of:http://optioncreator.com/new 
*Dividends- but the date does not affect us- vital to watch for simple schoolboy mistakes
