How Is the Breakeven Point for a Long Straddle Calculated?
A long straddle has two breakeven points. The upper breakeven point is the Strike Price + Total Premium Paid.
The lower breakeven point is the Strike Price – Total Premium Paid. The price of the underlying asset must move outside of this range by expiration for the trade to be profitable.
The range represents the amount of movement needed to recoup the initial premium cost.
