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Hi folks - I'm hoping someone with more experience can help me get my head around a concept. I'm looking at options trading strategies, and am studying short strangles. Assuming you didn't have the ability to monitor a short strangle 24/7, you'd want to put stop losses on the position. How would one go about doing this using the spot market to render the position neutral at certain trigger points? (i.e. without limit buy/sell orders on the options themselves). So assuming you put down a short strangle on GBPUSD, you would sell a put and a call out of the money, make the premium and wait for expiry hoping the GBPUSD didn't move beyond your strike range. What limit orders should you place in the spot market in order to limit the downside of this otherwise crazy-risky position? Before anyone looks at me askance, I am not currently holding an uncovered short strangle, nor have I ever, this is a theoretical question. Many thanks in advance... Inc.
