How To Trade Short Strangles

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In this video post, we will walk you through how to:

  1. Evaluate Implied Volatility
  2. Find an underlying symbol to trade
  3. Locate the correct strikes to trade
  4. Analyze the trade
  5. Place the trade
Here are the metrics we look for when trading a Short Strangle:

  • Market Assumption – Neutral
  • Implied Volatility – High
  • Trade Setup: Sell (short) 1 OTM Call; 15-30 Delta, Sell (short) 1 OTM Put; 15-30 Delta,
  • Profit Target – 30-50%
  • Downside risk – Undefined
  • Upside risk – Undefined
  • Probability of Profit – Over 70%
  • Time Decay (Theta) POSITIVELY impacts this position
Watch the video below to learn more...
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