When should you buy and sell strangle in Dubai?

One strategy that can be exceptionally profitable is the strangle when it comes to trading options.

What is a strangle

A strangle involves buying both put and call options on the same underlying asset, with different strike prices and expiration dates. The key to successful strangling is correctly predicting which way the underlying asset’s price will move and then timing your trade to buy the options when they are at their cheapest and sell them when they are at their most expensive.

When is the best time to buy and sell a strangle in Dubai?

Generally speaking, there are some times when a strangle can be exceptionally profitable:

When there is high implied volatility

Implied volatility (IV) measures how much the market expects the price of an underlying asset to move in the future. When IV is high, options are expensive, and when IV is low, options are cheap.

When there is a big move in the price of the underlying asset

If you buy a strangle when the underlying asset is expected to make a big move, you can make a lot of money if your prediction is correct. Conversely, you will likely lose money if you buy a strangle when the underlying asset isn’t expected to move.

When the underlying asset is near its expiration

If the underlying asset is near its expiration, the options will be cheaper, creating a profit opportunity. However, you need to be careful because if the underlying asset’s price doesn’t move as expected, you could lose all of your investment.

When the underlying asset is at an extreme

If the underlying asset is at an extreme (either high or low), this can create opportunities to make money with a strangle.

Of course, there is no guarantee that you will make money by buying and selling strangles. However, if you do your homework and pick the correct times to trade, it can be a very profitable way to day trade options.

When there is a change in the underlying asset

If there is a change in the underlying asset, such as a new product release, this can create opportunities to make money with a strangle

When you have an edge

If you have the edge over other traders, such as access to better information or more experience, this can give you an advantage and help you make money with a strangle.

Benefits of a strangle

A strangle allows you to profit in all market conditions.

Profiting in all market conditions is one of the significant advantages of a strangle. You can make money with the call option if the market goes up. If the market is going down, you can make money with the put option. And if the market is going nowhere, you can still make money by selling the options back to the market.

A strangle gives you more time to trade.

When you buy a strangle, you buy both a call and a put option. It gives you more time to trade than buying one option or the other.

A strangle lets you trade with less capital.

When you buy a strangle, you are only buying two options. You can trade with less capital than buying a straddle, which requires four options.

A strangle gives you more flexibility.

A strangle gives you more flexibility than other types of trades. You can choose which options to buy and sell and when to buy and sell them.

So, when should you buy and sell a strangle in Dubai?

If you’re looking to profit from high IV or a big move in the underlying asset price, you should consider buying and selling a strangle. However, you need to be aware of the risks involved and make sure that you understand how the options market works before you trade.

Bottom line

There is no perfect time to buy and sell strangles. However, if you keep your eye on the market (official site) and trade when there are good opportunities, you can make a lot of money with this strategy.