The point here is not to give a defined system for when to trade straddles, but to point out that no matter what the system, the price paid for the straddle is important. It is not enough to simply say that we expect the underlying to move a lot so we are going to buy a straddle regardless of the cost. The chosen straddle needs to be priced attractively compared to our expectation for the underlying price over the lifetime of the options. If we are planning to hold the straddle until expiry, we could simply calculate the breakeven points given the current price of the straddle, and compare that to our expectations of how far the underlying price is likely to move. If we are planning to delta hedge the straddle, we can compare the implied volatility of the straddle with our forecast for volatility.
