Selling straddles (short straddle) is a high-risk options trading strategy that aims to profit from a range-bound stock price and/or decrease in implied volatility.
In this video, we examine the historical results of selling straddles on the S&P 500 ETF (SPY) and look at the impact of using profit targets OR stop-losses when trading short straddles.
The video answers the following questions:
1) How have short straddles performed on the S&P 500 since 2007?
2) Have stop-losses historically improved the long-term profitability of selling straddles on SPY?
3) Historically speaking, has closing profitable trades early improved or decreased strategy performance relative to holding trades until expiration?
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