Straddle Spreads On News With Nadex - VIDEO
Had a question on news trades and specifically one I took on wed. It was the 7/17 4:30am GBP trade. Calendar was awesome and gave all the possible strats and stats. I prefer doing the straddles on the actual news events more than anything else, but when I checked GBP/USD the risk was too high across the board. Still wanting to participate I checked the GBP/JPY and noticed it has had some wild moves recently. Was able to put that trade on within the $45 max risk guideline and got an amazing, nearly immediate 1:1 winner with plenty of room for even more. Is it ok to check the other pairs that involve the target currency like I did in this case, even if stats weren’t specifically given for the alternative pair? Or did I just get lucky?
You can do this. And often the GBP/JPY does move more than the GBP/USD if there is a big move. If there is not often the GBP/USD will move more than the GBP/JPY. So its not wrong, its not luck, and if less risk it makes sense to do. Just be ready to exit if you don’t get the divergence.
Did you mention anything about the BE distance shown on the scanner (delta between entry price and underling) ? Since the underling has to move at least THAT distance before any profit is made. So if I understand it correctly, if one side has a risk (entry price minus floor /ceiling) of say, $20 and a BE of say $10 (shown on scanner - difference between entry and underling) , then once it moves the $10 down if short/up if long. THEN adding the risk from the other side, would give you a truly BE exit. This is all assuming you exit the spread before expiry, which I guess you would normally do on a news announcement. Am I missing anything?
Think your complicating things
Breakeven on one side is exiting at where you entered
This distance is on the scanner in plain site
Delta is the measurement of a derivatives move in % of a $1.00 move in the underlying. Breakeven distance and delta are not the same or similar
Breakeven on both sides is exiting at where you entered plus this risk on other side as obviously for breakeven you have to cover the total risk
The assumption that the market has to move this far before you make anything is invalid
Breakeven distance is as of expiration
You can exit before expiration
The market may may not move at all and IV could go so high you could be profitable on both sides (not theory actually happens)
Im sorry , Im still a lil confused, thx for your patience.
See attached word document, my computer will not accept Jing download, so I am working w Jing to correct.
the attached shows an order ticket from the scanner, underling at 1.5517, short entry (to complete a news spread straddle) would be the Bid price of 1.5480 for a diff. of 27 (scanner shows 29 bc of when I took a print screen).
So the underling would have to move 27 ticks before short spread would BE by itself. Then add the dollar risk from buy side of straddle to get the BE for the straddle
I guess what I am missing here is the BE of 27 ticks is AT EXPIRY…is that what I am missing?
Well I see now that I cannot add a file here to this post, so the info above is from an order ticket generated from the spread scanner.
Word does not attach. jing is owned by techsmith.com
No you do not add be distance and dollar risk - just breakeven distance is all you need.
Break even on the scanner is at expiration yes like i said i the previous post - im not tricking you i really meant it 
. The market can move and the spread can be profitable before then. Remember part or all of the breakeven distance is premium. The premium will not be 100% gone until expiration so some or all of that value will still be there before expiration and the spread will increase and decrease in price as the underlying moves.
Breakeven distance applies at expiration -
It could move in your direction and you could potentially exit at breakeven before then.
Basically you are making this way to hard on yourself.
Just demo trade it and watch or just open a chart of a spread you will see it move like anything else.