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Chuck Profit

Chuck Profit

Chuck Profit

Chuck Profit

By: Admin | Date: November 11, 2011 | Categories:

The stock option straddle (sometimes called the long straddle) is gaining popularity these days. It is defined as when an investor buys a put and call option on the same stock, each having the same strike price and expiration date.

Volatility is important. The investor in straddles is looking for an underlying stock that is volatile—that moves substantially either up or down. If the stock goes up, the call option increases in value, if the stock goes down, the put increases in value.

The methodology is to do a straddle in advance of news concerning a company, usually concerning earnings reports.


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