en     ru     jp
 
 
private banking
private banking
private banking
private banking
private banking
private banking
private banking
     
 
Home
      
Knowledge Base
      
Financial Glossary
      
Straddle
       
 
Back

Straddle

 Search definitions     
  Search  

Straddle
An options strategy with which the investor holds a Position in both a call and put with the same Strike Price and Expiration Date.
    
In finance, a Straddle is an investment strategy involving the purchase or sale of particular Option derivatives that allows the Holder to profit based on how much the price of the Underlying Security moves, regardless of the direction of price movement. The purchase of particular Option derivatives is known as a Long Straddle, while the sale of the Option derivatives is known as a Short Straddle.
    
Straddles are a good strategy to pursue if an investor believes that a stock's price Will move significantly, but not sure of its direction. The stock price must move significantly if the investor is to make a profit. If only a small movement in price occur in either direction, the investor Will experience a loss. As a result, a Straddle is extremely risky to perform. Additionally, on stocks that are expected to jump, the market tends to price options at a higher Premium, which ultimately reduces the expected payoff should the stock move significantly.
Posted by  Privatebanking.com
 
  Back  
  Print  
  Email  

 

private banking
Get Adobe Flash Player to view the media
FlashPlayer required to view the media
private banking
private banking
private banking
private banking
private banking

 
Home News Library Newsletters Event Calendar Advertise About Contact FAQ
Privacy Policy     Terms of Service
 

©