2017issue C0738-41
A two-sided news straddle as an execution and risk-bound problem
The archive frames a two-sided news straddle as a way to meet a high-impact scheduled release without assuming the post-release path. Editorial reading: lock the event, the venue, and a pre-set loss bound, then let volatility select the live side.
- High-impact scheduled releases are treated as binary events, so the setup does not assume the post-release price path is known.
- The options-straddle posts both a long and a short so the first large move after the release can be captured without forecasting direction.
- When the plan depends on news execution, the write-up prefers liquid USD pairs and a true ECN/STP venue, and it lists requotes and related hazards as blockers.
- A fixed 20-pip stop and 100-pip target set a 1:5 risk-reward-ratio before either side is triggered, and the archive still recommends paper practice.
A two-sided setup around a scheduled release
The archive treats high-impact scheduled releases as binary events. It does not assume that the post-release price path is known in advance.
The options-straddle is framed as a news-release procedure that tries to participate in the ensuing move on either side of the market. It posts both a long and a short so the first large move after the release can be captured without forecasting direction.
News-trading, in this write-up, is a timed procedure that enters around the release and uses the resulting burst of volatility as the signal.
Venue choice and execution hazards
The write-up prefers liquid USD pairs and a true ECN/STP venue over a dealing-desk market maker when the plan depends on news execution.
Slippage, requotes, stop-loss hunting, frozen quotes, and spread widening are listed as execution hazards that can block or distort a two-sided news entry.
A market-maker requote is described as a delayed fill at a worse price than the one requested, which a news trader may not be able to absorb.
A loss bound before either side is live
The risk-reward-ratio is a pre-entry bound that pairs a fixed stop distance with a larger profit target so a loss is sized before either side is triggered.
An alternative live-order variant opens both sides less than 60 seconds before the release, then attaches a 20-pip stop and a 100-pip target so the risk-to-reward is 1:5.
After news volatility triggers one side, the plan moves that stop to breakeven and closes when momentum fades. A pending-order variant may require a manual close of the untriggered buy-stop.
Paper practice, not an automatic rule
The archive says different releases behave differently. It still recommends paper practice rather than treating the procedure as automatic.