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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
Moreover, Carter (2006) coined the concept of cultural straddlers to characterize participants in her study who had the ability to mobilize different cultural repertoires depending on the situation.
Most participants in both groups are linguistic straddlers who codeswitch according to the circumstances.
(25) Acting in his role as a straddler, the mayor contributed an additional $50,000 from his mayoral campaign fund (Wilson, 2003).
Second, do the straddle positions disclose, on the straddlers' parts, an objectionable inconsistency?
It still didn't look like it was going to be significant, because out of the 14 guys in competition they were all straddlers except for him, and he was struggling at 6-10.
Generic tactics and strategy are discussed next, but successful "straddlers" also specifically depend on two aspects of market integration that mean they largely avoid the enclave and opportunity-cost shortcomings suffered by position A.
Desired targets, such as cut-ins and lane straddlers, can be missed because of the reduced azimuth coverage.
"Kauder gave such a rabidly nationalist speech that he pushed some of the straddlers the other way.