Long Straddle

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DEFINITION of 'Long Straddle'

A strategy of trading options whereby the trader will purchase a long call and a long put with the same underlying asset, expiration date and strike price. The strike price will usually be at the money or near the current market price of the underlying security.

INVESTOPEDIA EXPLAINS 'Long Straddle'

The strategy is a bet on increased volatility in the future as profits from this strategy are maximized if the underlying security moves up or down from present levels. Should the underylying security's price fail to move or move only a small amount, the options will be worthless at expiration.

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RELATED FAQS
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    The long straddle and long strangle option strategies take advantage of the electronic sector's cyclical nature. Both strategies ... Read Full Answer >>
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    An investor can profit from the cyclical nature of the electronics sector in two ways. He can employ sector rotation, shifting ... Read Full Answer >>
  3. What options strategies are best suited for investing in the drugs sector?

    The covered call and long straddle options strategies enable investors to capitalize on the unique characteristics of the ... Read Full Answer >>
  4. What options strategies are best suited for investing in the aerospace sector?

    The best options strategies for investing in the aerospace sector exploit the sector's volatility and propensity for big ... Read Full Answer >>
  5. Under what circumstances should I pursue a straddle?

    A straddle is an option strategy composed by an investor buying, or selling, a call option and a put option with the same ... Read Full Answer >>
  6. What's the difference between a straddle and a strangle?

    Straddles and strangles are both options strategies that allow the investor to gain on significant moves either up or down ... Read Full Answer >>
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