Long straddle

Long straddle

Taking a long position in both a put and a call option.

Long Straddle

The act or state of having a long position in both a put option and a call option with the same underlying asset, strike price, and expiration date. An investor may take a long 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. The long straddle allows the investor to profit regardless of which direction the underlying moves. It is also called a bullish straddle. See also: Straddle.
Mentioned in ?
References in periodicals archive ?
On March 17, we bought a long straddle on the EWJ which is "at the money" purchase of both call & put option contracts.
With long straddle, profits are earned irrespective of the markets 'fall or rise.
Long Straddle: This strategy involves buying a call and a put option with the same underlying security, expiry date and strike price.
Short Straddle: This strategy is the reverse of long straddle and is implemented by selling a call and a put option with the same underlying security, strike price and expiry date.
Rajesh purchases 6,450 RST Index options and enters the long straddle; Naveen sells 6,550 RST Index options and enters short straddle.
The long straddle position will reward them if the price moves substantially either up or down.
The long straddle is created by buying a call option and a put option with the same strike price; usually, at the money.
Figures 41.13 and 41.14 show the profit profile of a long straddle and a short straddle, respectively, where the current stock price and both strike prices are equal to 50.
When investors create a long butterfly, they add an out-of-the-money short call and an out-of-the-money short put to the at-the-money long call and at-the-money long put of the long straddle to reduce the net premium paid for the position.