Option : Short Straddle
Targeting variability
The Short Straddle strategy can be explained that investor sell both call and put options with same expiration date and same strike price. This strategy operates properly when market volatility is low. The Short Straddle strategy provides a fixed premium return for investors. To put it another way, investor can generate significant revenue because they can receive a premium both call and put options.
In addition, the premium will be converted into investors’ profit if the stock price does not deviate significantly from the exercise price with constant volatility. This is an advantageous strategy for the pursuit of fixed profit.
Basically, the Short Straddle strategy can have potential risks when the market shows high volatile. In other words, investor can suffer from massive losses if the market moves unexpectedly. For example, FTX crisis has shown an unexpected market circumstance. Nevertheless, Ladder Finance is developing a strategy to minimize risk and protect investors’ asset through professional analysis and monitoring by asset management experts. Consequently, this strategy has the strength of generating revenue from low volatility, and it can be accepted as an attractive strategy that can contribute to the protocol regardless of the market price.
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