Long Straddle

Description

Buying both a Call and a Put at the same strike price.

Trading Logic

Bets on high volatility regardless of direction.

Practical Example

Stock at $100. Buy $100C ($5) and $100P ($5). Total cost: $10.

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P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss