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.


Nearby Terms

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z