The advantage of a short straddle is that the premium received and the maximum profit potential of one straddle (one call and one put) is greater than for one strangle. The first disadvantage is that the cost and risk of one straddle (one call and one put) are greater than for one strangle. Thus, for small changes in stock price near the strike price, the price of a straddle does not change very much. Short calls that are assigned early are generally assigned on the day before the ex-dividend date. In this Short Straddle Vs Short Strangle options trading comparison, we will be looking at different aspects such as market situation, risk & profit levels, trader expectation and intentions etc. A short straddle is established for a net credit (or net receipt) and profits if the underlying stock trades in a narrow range between the break-even points. The loss occurs when the price of the underlying significantly moves upwards and downwards. Short straddles held over earnings could result in big losses if the stock makes a big price move. The negative to running a short straddle is that you have unlimited risk on both sides. The time value portion of an option’s total price decreases as expiration approaches. When it comes to short straddles, a good rule of thumb for taking profits is if 50% of the premium has been made in less than 50% of the time. A short straddle that is placed at-the-money is going to start delta neutral or very close to neutral. This is known as time erosion, or time decay. In reality, this is unlikely to happen and most traders will close out their position well before expiry. This one-day difference will result in additional fees, including interest charges and commissions. It is a violation of law in some jurisdictions to falsely identify yourself in an email. Otherwise, make sure to close the trade if either of the options are significantly in-the-money and do not have much time value remaining. The potential for risk in a short straddle is almost unlimited. Note: In reality short straddle is very tempting to play. The risk inherent in the strategy is that the market will not react strongly enough to the event or the news it generates. Also, as the stock price falls, the short put rises in price more and loses more than the call makes by falling in price. The delta of the trade will change throughout the course of the trade as the stock moves. A short straddle is an advanced options strategy used when a trader is seeking to profit from an underlying stock trading in a narrow range. The opening position of this strategy means that you will start with a net credit and you will profit if the stock trades between the lower break-even point and the upper break-even point. Short strangles, however, involve selling a call with a higher strike price and selling a put with a lower strike price. 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