*– Do you take the incremental stock price of $11 to mean the Option Price? therefore the gain is $11- the original premium costs of $9 = $2? So then $2/$9 = 22%?*

That’s correct.

*– You see, I m confused with the Stock Price vs the Option Premium and how to derive at the 22% gain?*

Returns are always calculated based on **how much capital is needed to intiate the trade**.

*– In Scenario 1 what are the Option Premiums for the Sell Put and Sell Call when we close the Straddle legs when the stk px reaches $80?*

I am assuming that on expiration day there is

- no time value

left. Thus we are calculating option premium (i.e. option value) based on intrinsic value only.

*– I m still not clear with the mechancis to close the Straddle. Do you execute a close both legs of the Straddle by a Sell Call and a Sell Put separately but concurrently? Or is it auto-close by clicking on the Straddle trade in TOS and do we get the Middle price for both legs to close?*

You do it as single order (for both opening as well as closing).

Hope this helps.

Profitable trading, OP

Thank you for your continual education.

Grateful if you can help me understand the following:-

1. How do you get 22% gains- I thought it is $11/$69= 16% ?

Dyou take the incremental stock price of $11 to mean the Option Price? therefore the gain is $11- the original premium costs of $9 = $2? So then $2/$9 = 22%?

You see, I m confused with the Stock Price vs the Option Premium and how to derive at the 22% gain?

In Scenario 1 what are the Option Premiums for the Sell Put and Sell Call when we close the Straddle legs when the stk px reaches $80?

2. I m still not clear with the mechancis to close the Straddle.

Do you execute a close both legs of the Straddle by a Sell Call and a Sell Put separately but concurrently? Or is it auto-close by clicking on the Straddle trade in TOS and do we get the Middle price for both legs to close?

Thank you!

Warmest rdgs,

Coco