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Username: Maria Rating:  Asked to: Jacob Rogers Date Created: 05 Oct 2017 |
| Category | 21 |
| Tag | Financial |
| Question | What is a 'Straddle'? |
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Hello Maria, A straddle is an options strategy in which the investor holds a position in both a call and put with the same strike price and expiration date, paying both premiums. This strategy allows the investor to make a profit regardless of whether the price of the security goes up or down, assuming the stock price changes somewhat significantly. Straddles are a good strategy to pursue if an investor believes that a stock's price will move significantly but is unsure as to which direction. Thus, this is a neutral strategy, as the investor is indifferent whether the stock goes up or down, as long as the price moves enough for the strategy to earn a profit. |
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