what is straddle?

In the context of options trading, a straddle is a strategy that involves buying a call option and a put option on the same underlying asset with the same expiration date and strike price. The goal of a straddle is to profit from price movements in either direction, either up or down.

If the price of the underlying asset moves significantly in either direction, one of the options will increase in value while the other will decrease in value, resulting in a profit for the trader. If the price of the underlying asset does not move significantly, the options will expire out of the money and the trader will incur a loss.

The straddle strategy can be used in a variety of market conditions and can be a useful tool for traders who are expecting significant price movements but are unsure of the direction. However, it is important to note that the straddle strategy can be risky, as it involves buying both a call and a put option, which can result in significant losses if the price of the underlying asset does not move as expected.