Market participants often overlook the potential of long-option strategies in favor of short-duration selling, yet long strangles offer a statistically driven, defined-risk approach to capturing significant price movements. Jeff Tompkins, Chief Investment Strategist at Altos Trading, explains that by identifying the implied expected move and purchasing out-of-the-money calls and puts, traders can capitalize on gamma expansion without needing to forecast directional trends. This strategy leverages the high gamma exposure inherent in zero-day-to-expiration (0DTE) contracts to achieve substantial percentage gains within a single session. Successful execution requires careful management of volatility, specifically avoiding "vol crush" after binary events, and utilizing flexible exit orders to mitigate risk. Integrating these quantitative tactics with real-time gamma data allows retail traders to bridge the performance gap typically held by institutional market makers.
Sign in to continue reading, translating and more.
Open full episode in Podwise