Option Trading: Volatility/Time Strategies

Option strategies that allow a trader to take a view on the market volatility are one of the biggest advantages of trading with options. We look at straddle strategies, which focus on the amount that the market moves, and not the direction. We describe strips and straps, which are variants on the straddle strategy, and then look at an example of a strangle strategy. We conclude our discussion of volatility strategies with an explanation of wingspreads, including butterflies and condors, before finally having a look at an option time strategy, the calendar spread.