Scatter diagram and Straddle: Difference between pages
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A | ''Options speculation''. | ||
A composite speculative deal in two options which results in profits from large changes in the underlying asset price, either up or down. | |||
The straddle’s profit/loss profile is ‘V’ shaped. | |||
It is also sometimes known as a ''bottom straddle'' or a ''long straddle''. | |||
A long straddle is constructed by simultaneously buying a call option and a put option with identical strike prices. | |||
The opposite composite transaction - which is a mirror image of the ‘V’ shaped long straddle - is known as a ''top straddle'' or a ''short straddle''. This is the position taken by the seller of a conventional long straddle. | |||
== See also == | == See also == | ||
* [[ | * [[Option]] | ||
* [[Speculation]] | |||
Revision as of 14:20, 23 October 2012
Options speculation. A composite speculative deal in two options which results in profits from large changes in the underlying asset price, either up or down. The straddle’s profit/loss profile is ‘V’ shaped.
It is also sometimes known as a bottom straddle or a long straddle.
A long straddle is constructed by simultaneously buying a call option and a put option with identical strike prices.
The opposite composite transaction - which is a mirror image of the ‘V’ shaped long straddle - is known as a top straddle or a short straddle. This is the position taken by the seller of a conventional long straddle.
See also
