Trading Volatility: Why I Sometimes Buy Both Calls and Puts
One of the lessons I’ve learned over time is that I don’t always need to predict the exact direction of the market. Sometimes, it’s enough to know that a big move is coming. In those moments, I stop trying to be right about up or down — and instead position myself to profit from volatility itself.
When I Don’t Care About Direction
There are times when the market is sitting on a knife’s edge:
- Before a central bank decision.
- Ahead of major geopolitical meetings (like Trump–Putin or US–China talks).
- Around earnings or macro data surprises.
In these moments, I often sense the pressure building. I just don’t know which way it will explode.
The Straddle: Pure Volatility Play
When I expect a big move and want to cover both sides, I buy a straddle:
- A call at strike X.
- A put at strike X.
- Same expiry.
This position bleeds if the market stays quiet, but if volatility spikes, one side of the trade explodes in value while the other caps the loss.
Example: Gold at 3,600. Buy a 3,600 call and a 3,600 put. If gold rips to 3,800 or collapses to 3,400, I win either way.
The Strangle: Cheaper Insurance with a Wider Net
Sometimes premiums are expensive. To lower the cost, I buy a strangle instead:
- A call above spot (say 3,700).
- A put below spot (say 3,500).
It’s cheaper, but I need a bigger move to get paid. This feels more like betting on an extreme breakout rather than just “more volatility.”
What Experience Has Taught Me
- Timing matters: Volatility is highest right before big events. If I buy too late, I overpay.
- Theta is the enemy: If the market doesn’t move, my premium melts.
- Implied vs realized vol: If implied volatility is lower than the swings I expect, buying both sides can be hugely profitable.
Why I Like It
Sometimes I don’t want to choose a side. Buying both calls and puts is like buying insurance against movement itself.
If nothing happens, I lose the premium. But if the market breaks, I don’t care which way — I’m covered.
It’s not a strategy I run every day, but when pressure builds and I smell an explosion coming, this setup gives me the peace of mind that I don’t have to be right about direction.
