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Can’t you construct a bet that a price will either go up or down, but not remain steady? I believe that’s called a long straddle but I’m not super knowledgeable

• clairity 8y ago
  yes, but that severely limits your upside, and it’s harder to thread the needle (in both timing and pricing).
  • ham_sandwich 8y ago
    In a straddle/strangle you have unlimited upside on both legs (up and down/call and put). It’s a matter of determining if the long gamma+long volatility position is worth the price you pay in option premium up front and decay thereafter (theta).
    • clairity 8y ago
      that's true, and a more complete explanation. i was taking the practical view that in most cases, the underlying options are reasonably priced and volatility is not highly unusual, so the practical upside is small at best. it's easy for the non-professional investor to lose money on these because you really need some extraodinary non-public information to exploit them.