short straddle

Short straddle

A straddle involves both purchase and sale. In short straddle one put and one call are sold.

short straddle

The short sale of an equal number of call options and put options with identical strike prices and expiration dates. A short straddle produces a profit only when the price of the underlying asset remains within a limited range.
References in periodicals archive ?
Long straddle provides opportunities for unlimited rewards and limited risk, whereas short straddle offers limited rewards and unlimited risk.
The short straddle is created by selling a call and a put for the same strike price; usually, at the money.
This finding suggests that the positive returns from the short straddle positions mainly result from decreases in implied volatilities of the options in the straddle.
The striking feature in Figure 5 is that equity behaves like a short straddle.