Straddle

High profits if the price rises or falls sharply during the period of holding

The Straddle is a strategy that helps you to make a bet on a volatility rise: that the price of an asset will soon increase or fall (any direction). The Straddle consists of a call option and a put option with the same strike price and the same expiration.

Instead of being bullish or bearish about the future price, you can have the following reasoning when buying it: “I don’t care what the price will be, but if it changes significantly in either direction during the period of holding the Straddle, I win.”

The Straddle has a limited cost and unlimited potential profit.

Buying one Straddle is equal to buying two ATM options - one ATM call and one ATM put.