The highest THETA strategy you aren't using:

The SHORT STRADDLE STRATEGY.

Knowing how to use it can potentially give you the highest profits if the market stays in a range.

Here's the step-by-step guide: 🧵

Collaborated with @niki_poojary

Here's what you'll learn in this thread:

1. What is a Straddle
2. Perks and Drawbacks
3. What to do when in profit?
4. How to adjust when in loss?
5. Videos on Positional Straddles
6. Ratio Straddles

Let's dive in ↓

1/ What is a Straddle?

Selling ATM CE & PE of the same strike price (usually ATM options) is called a short straddle.

Look at the picture below for an example of a short straddle in current weekly options.

2/ Why do traders like short straddles?

The highest theta or highest premium is collected in a straddle.

If the view is right, it can turn into a jackpot trade.

Sometimes the view is neither bullish nor bearish just sideways.

In this scenario, the straddle will work best.

3/ Perks of Straddles

Higher probability - More than 60% winning chance

Can turn directional too - Some strategies hit one leg SL so it turns into a directional trade

Big range - Can trade in Biweekly or Monthly or Far Months to get a wider range as well.