Options strategies
Long straddle
Definition
Buying a call and a put on the same underlying with the same strike and expiration, usually at the money. It profits from a large move in either direction and loses at most the premium paid.
Example
Say a stock trades at $100 and you buy the $100 call for $4.00 and the $100 put for $3.80, paying $7.80, or $780. At expiration the stock must be above $107.80 or below $92.20 for the trade to make money. If it closes right at $100, both options expire worthless and you lose the full $780.
Hypothetical numbers, for illustration only.
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