High IV? Sell This AAPL Strangle!

Why It Matters

This illustrates how traders exploit high IV rank to harvest premium, improving income generation but increasing tail-risk and potential capital obligations if the stock moves beyond the short strikes. Market participants should weigh collected premium against the substantial assignment and directional risks inherent in unhedged strangles.

Summary

With AAPL trading around $306 and implied volatility elevated, the trader sold a risky iron-less strangle into July (about 45–46 days) by writing one-standard-deviation options: 280 puts and 335 calls. The trade collected roughly $417–$427 in net credit, placing the downside breakeven near $278 and the upside obligation at $335. The position is short-delta and profitable if AAPL remains between the strikes, but it exposes the seller to assignment risk and large directional losses beyond the breakevens. The seller also notes timing to possibly wait for a small rally before entering to improve edge.

Original Description

Tony Battista dives into a powerful options trading strategy: the strangle option strategy. We explore how to leverage high implied volatility to set up a trade, demonstrating how to execute it effectively. Learn the mechanics and how to trade options with this detailed guide from tastytrade.

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