Explain the Payoff Structure of a 'Straddle' Option Strategy ▴ Learn

Explain the Payoff Structure of a ‘Straddle’ Option Strategy.

A Straddle involves simultaneously buying (Long Straddle) or selling (Short Straddle) a Call and a Put option with the same strike price and expiration date. The Long Straddle profits if the underlying asset moves significantly in either direction (high volatility).

The Short Straddle profits if the price remains stable (low volatility).

How Does Selling a Put Option Relate to the Risk of a Covered Call (Put-Call Parity)?

How Does a Synthetic Long or Short Position Relate to the Components of a Box Spread?

How Can a “Straddle” Option Strategy Be Used to Profit from a PoS Transition Event?

How Is a ‘Synthetic Long Call’ Constructed Using the Underlying Asset and a Put Option?