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Purchase or sale of an equal number of puts and calls with the same terms at the same time. Related: Spread.


The strategy in which one has the same position in both a put option and a call option with the same underlying asset, strike price, and expiration date. An investor may have a straddle when he/she believes that the market for the underlying asset will be volatile and will undergo dramatic price changes, but is unsure of which direction the changes will go. A straddle allows the investor to profit regardless of which direction the underlying moves, provided there is a significant movement. A small price change in either direction will result in a loss. See also: Long Straddle, Short Straddle.


1. In futures, the purchase of a contract for delivery in one month and sale of a contract for delivery in a different month on the same commodity.
2. In options, the purchase or sale of both a call and a put, generally with the same strike price and expiration date. The buyer of a straddle benefits from large price fluctuations in the underlying asset, while the seller of a straddle, who collects the premiums, benefits from small price changes in the underlying asset.


A straddle is hedging strategy that involves buying or selling a put and a call option on the same underlying instrument at the same strike price and with the same expiration date.

If you buy a straddle, you expect the price of the underlying to move significantly, but you're not sure whether it will go up or down. If you sell a straddle, you hope that the underlying price remains stable at the strike price.

Your risk in buying a straddle is limited to the premium you pay. As a seller, your risk is much higher because, if the price of the underlying security moves significantly, you may be assigned at exercise to purchase or sell the underlying security at a potential loss.

Similarly, if you choose to buy off-setting contracts when the prices move, it may cost you more than the premium you collected.


A straddle is any set of offsetting positions on personal property. One example, is a put and call option on the same number of shares of a particular security, with the same exercise price and expiration date.
References in periodicals archive ?
The minor foreign currency straddles do not qualify as Sec.
A straddle is defined as two or more "offsetting positions with respect to personal property," where one position provides a "substantial diminution" of the risk of loss from holding the other position (IRC section 1092[c][2][A]).
Regulations use the term "identified mixed straddle" to refer to those straddles for which the taxpayer has elected "straddle-by-straddle identification.
Some phrases offer a choice of 6-letter tautonymic straddles: FIND INDISPENSABLE (above *) has the two tautonymic straddles INDIND and NDINDI.
Although it is possible to sell straddles based on an incorrect comparison of volatilities, the larger risk from selling straddles often arises from the correlation between returns and volatility as well as large changes in asset price over a short period.
In the case in which an LAR-A and an LAR-B interacted, the LAR-B came up to the LAR-A on the trail and first tried to straddle it; then the lizards circled each other for about three seconds.
A straddle is an advanced trading strategy that involves holding long and short positions, such as buying both a put and call option, that essentially offset one another.
9627), which changed the treatment of prestraddle gain and prestraddle loss related to identified mixed straddles.
But where the underlying stock and one or more qualified covered call options are part of a larger straddle the overall straddle does receive straddle treatment.
The Reservoir straddles the border of Brooklyn and Queens just south of the Jackie Robinson Parkway.
Called the Coupled Ocean-Atmosphere Response Experiment, the project will probe the atmosphere and ocean in the vicinity of a huge pool of warm water that straddles the equator.
Other than Letter Ruling 199925044, no regulations or other guidance addressing the treatment of unbalanced straddles has been issued.