buying options straddles

[Jestli]

i know you have to pay the initial investment on both the call and put, but putting that limit on your risk and having unlimited leveraged benefit seems almost too good to be true

[ahnuld]

except most of the time you wont cover the costs of buying the straddle. Options are a zero sum game, if it was this simple do you think anyone would write options?

[Jestli]

i know its not that simple or easy nothing is and everything has risk but people write a call when bearish and write a put when bullish, if you dont think the market was gonna move you could write a straddle, so im just saying with those highly volatile stocks that are really movers it seems like a good move

[skindog]

The cost of a stock's time premium goes up as the stock's volatility goes up. So like Ahnuld said, there is no such thing as a free lunch.

You should pick up an options book!

[stephenNUTS]

[ QUOTE ]
except most of the time you wont cover the costs of buying the straddle. Options are a zero sum game, if it was this simple do you think the guys who make some big bucks would write options?

[/ QUOTE ]

FYP [img]/images/graemlins/cool.gif[/img]