As another example, suppose you knew Tesla will go up 1% in value over the next month. If you are a normal human being then you might consider buying Tesla stock. But if you have been following along so far then you understand why “buying Tesla stock” is almost completely wrong. What should you do instead?
Technically, you maximize profit by buying a short strangle expiring in a month with strike price 1% over the current price.
Technically, you maximize profit by buying a short strangle expiring in a month with strike price 1% over the current price.