Which option strategies work when a big move is expected?
Big move expected, direction unknown (event, coiling at the edge of a range)
What fits when the direction is unknown?
When a large move is expected but its direction is not, size of movement is what pays. A long straddle or long strangle buy exactly that: they win if the move is big enough, either way. A protective put or a collar instead insure stock you hold against the downside.
Strategies that suit this market phase
5 of the Academy's 30 strategies list this market phase. Every strategy links to its full explanation and worked example.
- Direction
- bullish with downside protection
- Max profit
- unlimited
- Max loss
- (S0 - Kp) + D
- Risk defined
- Legs
- 2
- Level
- 1
- Experience
- Beginner
- Direction
- neutral, capital preservation
- Max profit
- (Kc - S0) + (C - D)
- Max loss
- (S0 - Kp) - (C - D)
- Risk defined
- Legs
- 3
- Level
- 1
- Experience
- Intermediate
- Direction
- direction-neutral, needs a big move
- Max profit
- unlimited
- Max loss
- D
- Risk defined
- Legs
- 2
- Level
- 2
- Experience
- Intermediate
- Direction
- direction-neutral, needs a very big move
- Max profit
- unlimited
- Max loss
- D
- Risk defined
- Legs
- 2
- Level
- 2
- Experience
- Intermediate
- Direction
- strongly bullish
- Max profit
- unlimited
- Max loss
- W + D
- Risk defined
- Legs
- 2
- Level
- 4
- Experience
- Advanced
What a pending breakout looks like
You recognise this phase by its trigger rather than its chart: a date on which something gets decided, or a consolidation coiling at the edge of its range. You expect a large move and you deliberately have no view on which way. That is a legitimate thesis — and the most expensive one available.
What pays you is realised movement, not direction. A long straddle and a long strangle are open at both ends and profit once the move exceeds the premium you paid. That is also where the difficulty sits: the market has already priced the move it expects, so implied volatility ahead of a known date is high by construction.
The standard mistake is buying the straddle right before the event. Implied volatility drops the moment the uncertainty resolves, and a move that looks large can still be too small to cover that collapse. Wanting the movement is not enough — the trade needs a view on whether it will be larger than the one already priced in.
Read on
Other market phases
This material is general information about option strategies, written for a general audience. It is not investment advice, not a recommendation, and not financial analysis. Options can lose their entire value, and uncovered positions can lose more than the amount committed. Anything said about tax is general in nature and is no substitute for professional tax advice. Last reviewed: 2026-08-06.