The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at optionalpha.com and welcome back to the daily call. Today, we are going to be talking about how to setup a short straddle option strategy. A short straddle option strategy is probably one of the core and most aggressive option selling strategies that you can do and it's basically setup by selling at the money calls and at the money puts at the same strike price. For example, if a stock is trading at $100, you would go ahead and sell the 100 strike put option and the 100 strike call option. It's always setup using the at the money strikes or near at the money strikes, whatever strike prices you can get that are closest to where the stock is trading, so that you can try to build the strategy as neutral as possible. The idea with a short straddle is that even though you’re selling options where one contract is conceivably going to be in the money at all times, you are taking in the most amount of option premium by selling those at the money contracts, therefore, moving yo