In a Straddle Strategy, Why Are ATM Options Typically Chosen? ▴ Learn

In a Straddle Strategy, Why Are ATM Options Typically Chosen?

A straddle involves buying both a Call and a Put option with the same strike price and expiration date. ATM options are chosen because they offer the highest leverage on a significant price movement in either direction.

Since ATM options have no intrinsic value, the strategy profits if the underlying price moves away from the strike price by more than the total premium paid. Their high Gamma also makes them sensitive to initial price moves.

In a Fragmented Market like Cryptocurrency, How Can a Trader Maximize the Chance of Price Improvement?

How Can Traders Use Options to Speculate on the Outcome of an Earnings Report?

Name a Common Options Strategy That Is Inherently Delta-Neutral at Initiation

Does a Short Straddle Position Have Positive or Negative Gamma?