I just think it's one of those strategies that look good on paper but difficult to execute. Assuming you are referring to NFP, like all news the sentiment can change in a blink of an eye where you might have a super employment number but weakening wages. This sort of outcome happens fairly regularly and will whipsaw price to extremes in both directions. So you might just close the losing side only to realise that it would have become the winning side but now it's closed and you have doubled your losses.No, FXX, all you're hoping for is a dramatic movement away from current price, the more dramatic the better. If the move is not enough to cause closure of the losing side of the straddle, you've lost nothing barring the costs of opening two positions. With a simultaneous long and short of equal sizes, the loser is stopped out or closed by a margin call or whatever - but ESMA's NBP rule now means that if all closure mechanisms fail and price continues in its initial direction, you can still only lose your deposited funds from the losing account while the winner grows without restriction.
So is this a way to play an upcoming event that generates extraordinary volatility, like NFPR's?
I won't be doing this but someone will - why won't it work?