Straddle
A straddle is an options strategy where you buy (or sell) both a call and put option at the same strike price and expiration date. Long straddles profit from big moves in either direction, while short straddles profit when price stays flat.
Understanding the Concept
• Long straddle: buy call + buy put at same strike (betting on volatility) • Short straddle: sell call + sell put at same strike (betting on stability) • Break-even points are strike price plus/minus total premium paid • Popular before earnings or major announcements when big moves are expected
Real-World Example
Tesla trades at $250 before earnings. A trader buys a $250 call for $15 and a $250 put for $14, paying $29 total. They profit if Tesla moves above $279 or below $221 after the announcement. If Tesla only moves to $260, they lose money because the move wasn't big enough to cover the premium.
How Strykr Helps
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