Chapter 06 · Section 6.1

What is a Straddle?

A straddle represents an option strategy consisting of a call and a put on the same underlying with the same exercise price and expiration dates.

The Short Straddle is a combination consisting of a short call and a short put for the same option and exercise price.
The Long Straddle is a combination consisting of a long call and a long put for the same option and exercise price.

What is a Strangle? A strangle is very much similar to the straddle but the put and call have different exercise prices. It is also possible to create a long or short strangle position as is the situation with straddles.