Strategy – The Pinocchio Strategy
The Pinocchio strategy is similar to the straddle strategy – it calls for deliberately betting against the current trend.
In a nutshell, if an asset is experiencing an upward trend, you must place an option expecting the price to fall. By the same token, you must use an option expecting an asset’s price to rise if the asset is experiencing a downward trend.
While beginners with no knowledge can apply the strategy, a deep understanding of the asset is essential to making this strategy work. Only if you understand how the asset works will you make accurate predictions and make profits.
How to apply
You must first look at the candlestick chart of the asset you’re looking to trade. When the candle is white or dark, it indicates that the market is bearing or bullish, respectively.
If the wick of the candle points downwards, place a call option. If the wick points upwards, place a put option.
