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

Hey everyone. This is Kirk here again from Option Alpha. Welcome back to the daily call. Today, we’re going to be talking about how to adjust short straddle option strategies. Short straddles are probably one of our favorite strategies here whether we do them regular, I guess or naked short straddles or we do them synthetically with iron butterflies because sometimes we will sell a short straddle and then buy protective wings because they’re really cheap during low implied volatility and basically create an iron butterfly. But a lot of people have confusion on how you should adjust these strategies or I guess there's a lot of confusion on how you should go about adjusting new strategies. Now, the first thing you have to understand is that with these strategies, whether you do them as a regular straddle or as an iron butterfly, is that because you’re selling at the money strikes, your first style of adjustment is going to be to go inverted. We’re not talking about rolling contracts to the next month. We’re tal