What Is a "Short Straddle" and What Is the Trader's Expectation? ▴ Learn

What Is a “Short Straddle” and What Is the Trader’s Expectation?

A short straddle involves selling both an ATM Call and an ATM Put with the same strike and expiration. The trader's expectation is that the underlying asset's price will experience low volatility and remain close to the strike price until expiration.

The maximum profit is the total premium collected, and the maximum loss is theoretically unlimited if the price moves significantly.

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