Add training workflow, datasets, and runbook
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The Risks with Short Straddles
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Looking at an at-expiration diagram or even analyzing the gamma/theta
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relationship of a short straddle may sometimes lead to a false sense of
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comfort. Sometimes it looks as if short straddles need a pretty big move to
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lose a lot of money. So why are they definitely among the riskiest strategies
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to trade? That is a matter of perspective.
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Option trading is about risk management. Dealing with a proverbial train
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wreck every once in a while is part of the game. But the big disasters can
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end one’s trading career in an instant. Because of its potential—albeit
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sometimes small potential—for a colossal blowup, the short straddle is,
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indeed, one of the riskiest positions one can trade. That said, it has a place
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in the arsenal of option strategies for speculative traders.
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