Cable is currently trading at spot 1.5377 and we are eying upon strip straddle because speculating opportunities lingering as the pair has been oscillating on either direction since last May but for now slightly downwards that this might now breakout to downside or to create a delta neutral straddle position. A comparative analysis between straddle and strips is illustrated as below.
Usually long straddle can be employed this way:
1 contract of ATM (strike 1.5387) call at $1420.53
Buy to Open 1 contract of ATM (strike 1.5387) put at $1446.32.
Net Debit = $2866.85
Overall Delta = close to zero
Maximum Profit = Unlimited
Profit = GBPUSD FX spot - Strike Price of Long Call - Net Premium Paid or Strike Price of Long Put - GBPUSD FX spot - Net Premium Paid.
Strip Straddle:
Buy to open 1 contract of ATM (strike 1420.53) call at $1420.15
Buy to open 2 contracts of ATM (strike 1420.53) Put at $1445.73.
Net Debit = $4311.61
Overall Delta = -0.49
Maximum Profit = Unlimited
Profit = GBPUSD FX spot - Strike Price of Calls - Net Premium Paid OR 2 x (Strike Price of Puts - GBPUSD FX spot) - Net Premium Paid.
Thereby, we conclude stating since downside pressure is intensifying, more profitability on strips strategy is possible than straddles with an extra cost on ATM put.


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