What is a straddle?
A straddle involves buying a call and a put or selling a call and a put with the same underlying security, exercise price and expiration date. The buyer of a straddle expects a significant movement (in either direction) in the underlying security. The seller of a straddle is anticipating the underlying price to remain stable. The risks of straddles are similar to those of uncovered options. If either leg of the option is exercised there is a risk of substantial loss.
Related Questions
- Straddle plants - The Netback for Straddle plants according to Directive 024 is to be based on the licensees most recent five fiscal years. How should this information be provided?
- Straddle plants – What if we have owned a Straddle plant for less than 5 years and therefore do not have a 5 year average netback?
- Can Autopage do straddle heads?
