What is a straddle?
A straddle
means two transactions sharing the security, including positions offsetting one
another. One of the operations is responsible for extended risk, the other for
short. As a consequence, it involves the buying or selling of option derivatives
that give the holder access to profit according to the moves in the price of
the underlying security, with no regard to the direction of price change. The
buying of particular option derivatives is called a long straddle, and the
selling of the option derivatives is referred to as a short straddle.
