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.
Glossar
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.
Maximum Profit Potential
Yield ⎊ Within cryptocurrency derivatives and options trading, yield represents the anticipated return relative to the initial investment, critically informing assessments of maximum profit potential.