LDK - Long Strangle Play

[DennisSels]

Discussed the concept of this strategy a few months ago with aiki; basically when you are playing this plan...you are expecting to stock to make a big move soon in the future but you are not sure which way it will go. Great example is hyped earnings, great earnings will skyrocket the pps or the other way around, or drug trials for example.

[DiscountbabyMax]

So you buy an out-of-the-money put and call and when the stock moves one way, the other becomes worthless and you'll make money if the stock's price moves enough to cover your premium.

http://i5.tinypic.com/7xspu0g.png

[Derrickmet]

Enjoy, hope you guys will learn and benefit from this.

[Diannapt]

Here's a graphic analysis of the trade. I used $2.40 for the DEC70 call and $0.80 for the DEC45 put. The stock price was $59.45. I assume 10 contracts for each option for a total cost of $3,200 before fees.

http://onlinetradersforum.com/attachments/ldklongstraddlevol-analysis-jpg.2263/

[DjustineDiow]

The stock price was $59.45.