Straddle option strategy is really a non-directional strategy. This means that you may make money without knowing where the market will move. It doesn't matter when it moves up or down, you may make money when it moves either way.
The career is developed by purchasing the same quantity of call and put options with the same strike price and expires at the same time. There are two types of Straddle, long straddle and short straddle. Long Straddle is developed by purchasing an at the money call option and a put option. Both options are bought at the same strike price and expire at the same time. A brief Straddle is developed by selling a put and a phone of the same stock, strike price and expiration date.
Long Straddle has unlimited profit and limited loss. While on Short Straddle the profit is limited to the premiums of the options. Short Straddle loss is unlimited if stock price increases very high or likely to zero.
Straddles is frequently used in uncertainty like before an important corporate announcement, earning announcement, or drug approval. When the headlines eventually happens, the cost will go up or down radically. Due to the characteristic, it is called a volatile option strategy. Another tip on buying Long Straddle is to buy it if it is in low volatility. The cost is cheaper than when it's high volatility. When price is consolidating having an expectation that it will break out, it is the better time and energy to Long Straddle.
Knowing technical analysis, you can enter the long straddle position when it shows'triangle'or'wedge'formations. You can notice that the recent highs and lows are coming together. It's a signs of breakouts.
The straddle trade is quite a long time strategy. It might take anywhere from several days up to a month, so you never need to view it every few hours.