Straddle


Also found in: Dictionary, Thesaurus, Legal, Idioms, Encyclopedia, Wikipedia.

Straddle

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

Straddle

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.

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.

Straddle.

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.

Straddle

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 ?
Stacking of containers includes analysis on mini straddle carrier, 1-over-1, 1-over-2 and 1-over-3 straddle carriers.
Generally, if two or more positions qualify as a straddle, a taxpayer cannot deduct a loss realized by disposing of one of the positions to the extent there is unrecognized gain in the position the taxpayer still owns.
The bill also requires, if a straddle includes two or more regulated futures contracts, that all the contracts will be treated as terminated on the date the taxpayer takes delivery under any of such contracts.
When will direct ownership of stock be subject to the tax straddle rules?
Rajesh purchases 6,450 RST Index options and enters the long straddle; Naveen sells 6,550 RST Index options and enters short straddle.
The longer ear requires milling on both sides, thus the difficult straddle milling operation.
Straddle is in Clyhore, Co Donegal and Chivers' station is 600 yards into Northern Ireland in Corry, Belleek, Co Fermanagh.
Because some of the tribe's traditional lands straddle the U.S.-Mexican border, members frequently travel back and forth to visit relatives, to conduct tribal business, to obtain medical care at clinics in the Tohono O'odham capital of Sells, Ariz., or for religious occasions including Catholic first Communion and traditional tribal ceremonies.
The stacker's standard features include: hydraulic lifting/lowering using a high-pressure pump with a 1.5 kW motor; a built-in 10-amp automatic battery charger; a floor locking foot brake, and adjustable straddle legs and forks.
Of eight volcanoes that straddle the borders of Rwanda, Congo, and Uganda, Mount Nyiragongo is the most feared: Its last eruption in 1977 killed around 70 people when molten rock burst through long cracks, called fissures, lining the mountain's flanks.
When the straddle is created, the change in its value is not very sensitive to the change in the value of the underlying asset.
But in this 20th anniversary year, with close to 2,000 delegates expected, the registration fee in four figures, and Canada loudly being proclaimed as the second-largest exporter of TV programming in the world, the straddle has turned into a major gymnastic manoeuvre.