What are some options strategies to use when prices break out of a band?

Short Straddle

When neutral on the outlook for a stock, an investor might wish to generate income by selling same strike call and put options hoping that the stock will remain stuck in a defined range…

Long Straddle

This strategy consists of buying a call option and a put option with the same strike price and expiration. See the original study notes from Options Industry Council (OIC) Education…

In the case of U.S. securities options, the OCC will automatically exercise option contracts at expiration only if the option is in-the-money by $0.01 or greater.

As a result, account holders maintaining a call (put) spread with the short leg having a lower (higher) strike price that the long are subject to delivery risk if the short leg is in-the-money by $0.01 or greater and the long leg is not…

Short Straddle

When neutral on the outlook for a stock, an investor might wish to generate income by selling same strike call and put options hoping that the stock will remain stuck in a defined range…