When To Take Profit For Inverted Strangles

Some times inverted strangles are meant to reduce losses. When total credit collected is greater than width of inversion, we look to take profit at 50-75% of potential profit.

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Inverted Strangles

Good video by Dr Jim that introduces inverted strangles.

Key points:

  • First move untested side to same strike as tested strike -> becomes a straddle
  • Price continues to move against us. Move option leg that we moved previously to where price is currently (ATM).
  • Roll inverted strangle out multiple times to collect as much premium to offset max loss which is the width of the inverted strangle.

Watch full video.