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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 ?
Most participants in both groups are linguistic straddlers who codeswitch according to the circumstances.
Her comment reveals that, despite the fact that a multilingual linguistic straddler like her can speak French and English fluently, some Francophones perceive code-switching negatively because of a zero-sum view of bilingualism in Montreal (Bourhis 2012a:21).
Consistent with table top theory and the "straddler" role that he played as a member of the four-person school board majority, he perceived "community" as meaning individuals who hold, for example, a Ph.D.
Private sector interests ensured that there were African Americans who were willing to serve in straddler roles with symbolic authority on the school board majority because of the demographics of the school community--which was largely (81%) African American.
Part IV returns to the fourfold grid and generalizes the suggestion that an apparent break or difference in interpretative method is perhaps best understood as reflecting a transmethodological concern -- without, however, concluding that the straddlers are being objectionably inconsistent or opportunistic.
Akhil Amar's consistent nonexclusivism is almost certainly not a result of his being an enthusiastic nonformalist, which he does not, in fact, appear to be.(96) As for the straddlers, their views obviously cannot finally depend on methodological factors alone.