Almost all big stocks are swinging +/- 10% after results. I was checking straddles that expire the same week and they show good profit (25% +) even for 3% move up or down. This feels too good to be true. While a straddle will expire worthless if the stock doesn't move are there any other issues with this strategy?
Will there be IV crush after results that make both call and put lower in price?
Do straddles around results week work all the time?
byu/Plane-Isopod-7361 inoptions
Posted by Plane-Isopod-7361
3 Comments
They bleed theta when vol drops
Nothing works “all the time”. As mentioned in the previous response, you’re paying a lot for the move that a lot of people other than you are expecting. If you don’t get it, it’s a loser.
Short straddle > long straddle