Pure Volatilely

Randall Liss discusses a pure volatility play.
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Randall Liss reviews a strangle, which is a way to bet on the market breaking big in either direction. To execute this strategy, you would buy both puts and calls with the same expiry where the out-of-the money price is equidistant from the at-the-money price for each. A major consideration is time decay, because as with all options contracts, the closer you get to expiry without the option being in-the-money, the less the option is worth. The opposite of buying a strangle is selling a strangle, in which you sell the associated contracts and thus make a bet that a large move will not occur before the options expire. In this case, time decay works in your favor. This is inherently riskier, as your loss is potentially unlimited. Liss cautions, whichever you choose is a matter of preference, but keep in mind that 90% of options expire worthless.