The Long vs Short Straddle Option Strategy · Invest & Retire Community

The Long vs Short Straddle Option Strategy

The long straddle involves buying both a call and a put option at the same strike price, same underlying and same expiration date (ATM). It is ideal for potential big moves but uncertainty about direction.

The short straddle involves selling both a call and put option at the same strike price, same underlying and same expiration date (ATM). It is ideal when you expect low volatility in the stock price (stay around the current price)

Risk vs. Reward: Long straddles have a higher risk-reward ratio, as losses are limited to the premiums paid, but profits can be substantial. In contrast, short straddles can lead to significant losses if the market moves sharply.

0 comments