straddle

  

Definition

Options combining strategy in which one call and one put option both with the same strike price and expiration date--on the same underlying asset are either purchased (called 'long straddle') or sold (called 'short straddle'). Although this combinations of options is exercised usually as a unit, each option may be exercised separately. Its payoff depends on the changes in the volatility of the underlying asset's price.

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