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Straddle




A neutral trade that involves simultaneously buying a call and put at the same strike price and with the same Expiration Date.

Requires the underlying asset to move in an explosive nature (in either direction) in order to make the trade profitable.


Additional Comments:

A straddle is created by selling or buying a call and put option with the same underlying asset, the same contract month, and the same strike price.

For example, buying the Exxon 65 put and 65 call would be a straddle.

Related Terms:

Strangle
A "Strangle" is an option strategy that gives you the potential to profit in a trade ...

Directional Trade
A trade that requires the underlying asset to move in one direction in order to produce ...

Assignment
Refers to the option writer's (seller's) obligation to sell or buy a stock or other financial ...





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