The straddle and the strangle
1In one sentence
Buy a call and a put at the same time and you profit from a big move either way. Same strike is a straddle; different strikes is a strangle.
You don't need to guess the direction, only that the move will be big enough to beat what you paid for both options.
2Try it: switch, then drag
Example: NVDA is $215. Tap a strategy, then drag the dot.
Buy the $215 call for $9 and the $215 put for $8. Total cost: $1,700.
33 words to know
Straddlesame strike
A call and a put at the same strike. Costs more, but needs a smaller move.
Strangletwo strikes
A call above and a put below the price. Cheaper, but needs a bigger move.
Two break-evensup and down
The stock has to pass one of them by expiration for the trade to make money.
4Watch out
- You pay twice. Both options lose value every day nothing happens.
- Earnings are priced in. Before earnings, IV is high, so both options are expensive. IV crush can sink the trade even after a move.
- Small moves lose. If the stock ends between the break-evens, you lose part or all of what you paid.
5Quick check · 3 questions · optional
Common questions
What is a straddle in options?
A straddle is buying a call and a put with the same strike and expiration. It profits if the stock moves far enough in either direction to cover the cost of both.
What is the difference between a straddle and a strangle?
A straddle uses one strike for both options; a strangle uses a higher call strike and a lower put strike. Strangles cost less but need a bigger move.
What is the max loss on a long straddle?
The total paid for both options. It happens if the stock ends exactly at the strike at expiration.
Education only. Examples use illustrative numbers. Not financial advice; you make your own decisions.