Does a Short Straddle Position Have Positive or Negative Gamma?
A short straddle position involves selling both an at-the-money call and an at-the-money put, resulting in a net short option position. All net short option positions have negative gamma.
This means that as the underlying asset moves significantly in either direction, the short straddle loses money, and the position requires costly re-hedging.
Glossar
Straddle Position
Symmetry ⎊ This construction establishes a market-neutral position regarding the underlying asset's directional movement, whether in crypto or traditional finance.
Short Straddle Position
Position ⎊ A short straddle position in cryptocurrency derivatives represents a strategy predicated on anticipating minimal price movement in an underlying asset.
Straddle
Strategy ⎊ A straddle is an options trading strategy involving the simultaneous purchase or sale of both a call option and a put option on the same underlying asset.
Short Straddle
Strategy ⎊ A short straddle, within cryptocurrency derivatives, represents a neutral options strategy predicated on anticipating minimal price movement in the underlying asset.