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Chapter 8. Combination Conservative Tech... > The Augmented Strategy—A Short Strad...

The Augmented Strategy—A Short Straddle

Using the previous analysis, let's see what happens if you write a straddle instead of creating a strike price gap. You do this when you would find it most desirable to have either or both options exercised. Assuming that you write a straddle as close as possible to current market value of the stock, you could create potentially high premium value in the options.

Looking once again at the ten stocks in our model portfolio, we find the status of calls and puts closest to current market value, as shown in Table 8-3.


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