|A long straddle is the simultaneous purchase of a put and a call on the same stock, with the same expiration date and the same strike price. A non-directional option strategy that combines the simultaneous purchase of the same number of ATM puts and calls with identical expirations.
The maximum loss is limited to the net debit of the options.
The upside breakeven is equal to the net debit plus the strike price, and the downside breakeven is calculated by subtracting the net debit from the strike price.
The maximum profit is unlimited to the upside and limited to the downside (as the underlying can only fall to zero) beyond the break-evens.
Traders of long straddles expect exceptional market volatility but are unsure of which way the overall trend will be—so they are attempting to be on both sides of the market at the same time. Long straddles may be traded in cash or margin accounts and never require a deposit of more than the cost of the two positions.
The purchase of an OTM call and an OTM put with the same expiration date. ...
Bear Put Spread
A strategy in which a trader sells a lower strike put and buys a higher strike ...
Bull Call Spread
A strategy in which a trader buys a lower strike call and sells a higher strike ...
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