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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 ?
The minor foreign currency straddles do not qualify as Sec.
A taxpayer may elect to treat any gain or loss attributable to any foreign currency derivative that is not part of a straddle (defined in IRC section 1092[c]) as capital gain or loss if the foreign currency derivative is a capital asset in the hands of the taxpayer (IRC section 988[a][1][B]).
A taxpayer who owns mixed straddles may elect to establish one or more mixed straddle accounts for the purpose of determining gains and losses on positions includable in such account.
Long straddle reaches break-even points at 6,260 and 6,640.
Someone comparing the implied volatility with the simple measure of historical volatility might often be tempted to sell straddles. Box 1 shows, however, that implied volatilities can be above historical volatilities without any trading opportunities.
In the case in which an LAR-A and an LAR-B interacted, the LAR-B came up to the LAR-A on the trail and first tried to straddle it; then the lizards circled each other for about three seconds.
9627), which changed the treatment of prestraddle gain and prestraddle loss related to identified mixed straddles.
Stock that is part of a straddle at least one of the offsetting positions of which is a securities futures contract (see Q 1072) with respect to the stock or substantially identical stock will be subject to the straddle rules.
The difficult junction between old and new is managed by making a big steel portal that provides the main axial roof support of the new; it straddles the old, welcoming its north end under the generous roof.
Straddles. Straddle rules are one of the most difficult areas of the tax law.