what is a straddle 
a straddle is a neutral options strategy that involves simultaneously buying long position both a put option leg one and a call option leg two for the underlying security with the same strike price and the same expiration date a trader will profit from a long straddle when the price of the security rises or falls from the strike price by an amount more than the total cost of the premium paid the profit potential is virtually unlimited on the call leg as long as the price of the underlying security moves very sharply the profit on the put leg is capped at the difference between the strike price and zero less the premium paid zoe hansen investopediaunderstanding straddlesstraddle strategies in finance refer to two separate transactions that both involve the same underlying security with the two corresponding transactions offsetting each other investors tend to employ a straddle when they anticipate a significant move in a stock s price but they re unsure about whether the price will move up or down julie bang investopediaa straddle can give a trader two significant clues about what the options market thinks of a stock first is the volatility that the market is expecting from the security second is the expected trading range of the stock by the expiration date 