A both Risk-on & Risk-off Strategy, will you follow?
The single-leg 60,000-count, 120,000-count total of large orders from $Reddit(RDDT)$ which surged after its recent earnings report, were
Sell Call of 220 due Jan 15, 2027 at 41.48
Sold Put of 115 due Jan 15, 2027 for 32.48
A typical inversed straddle strategy.
But the bold and is the use of options seller, once the stock price breaks through the upper or lower limit, there may be a large loss.
Let's do the math for him:
The margin on the recently expired Reversed Straddle is relatively low, and at his 55% out-of-the-money Call and 19% out-of-the-money Put, it's actually only about one-tenth of a percent of the underlying stock.
Even if we take a full count at $14,178 a lot of the underlying stock, if the January 2027 expiration doesn't break out of this range, it will yield a staggering $7,396, or 52%, or more than 20% annualized.
What's more, there's an option to close the position early if it gains a lot during that time.
Would you guys consider such an operation?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
