All posts filed under: Naman Patel

Limited Risk and Unlimited Returns: A Primer on Straddle Strategies for Options Investors

How to use a straddle strategy to make money in bull and bear markets By Naman Patel      Impending central bank policy meetings, uncertainty regarding the upcoming U.S. elections, and obscure OPEC decisions are leading to disquiet among many investors. Not only are the outcomes of these events difficult to foretell, but so too are their corresponding economic effects. Attempting to predict whether market reactions to such events will be positive or negative is likely a futile endeavor. Instead, astute investors should use an options strategy that delivers returns regardless of which direction the market moves. How Straddles Work      Straddles are an options investing strategy in which an investor purchases a call option and a put option for the same underlying security–both with the same strike price and exercise date. If the price of the underlying stock rises above the strike price on the call option, the investor can exercise the call option. If the price of the underlying stock dips below the strike price, the investor can exercise the put option. …