DJT Options and Straddle Strategy – Bringing a Little “Trump Effect” into Options

If you're holding both a call and a put on the same stock, that's your classic Straddle strategy. The goal with a Straddle is to profit from big price swings in either direction – up or down. If the stock makes a big enough move, you can actually make money on both sides. In fact, with enough volatility, it’s possible to score profits on both the call and the put.

Implied Volatility – The price of an option isn’t just about the current stock price; it’s also driven by implied volatility. When the market expects big moves (think major events like earnings announcements or, in this case, the upcoming election results), implied volatility can shoot up. That means even “out-of-the-money” options can make you money. DJT options, for instance, have an implied volatility around 300% or higher.

Time Value – Both call and put options have time value (Theta), especially as expiration approaches. For example, buying an option on the 5th that expires on the 8th could have a high time value if the market expects volatility. In this case, the stock was around $39 when the screenshot was taken. The call's strike price is $46, so it's out of the money, yet it's up by 1200, meaning the stock price is likely climbing. Meanwhile, the put is also up because of lingering uncertainty and price fluctuations.

So, if there's a big event on the horizon or a major announcement, why not try this type of Straddle?

It doesn't have to be a “perfect” Straddle. For beginners, I'd suggest starting small and focusing on the buy side to keep risk manageable. Getting good at options starts with trying things out in a controlled, reasonable way.