Option Strategy #8: Long Straddle

Buy an at the money Put & Call (Same Strike Price)

Use the Long Straddle when you think the market will move sharply up or down, but don’t know

which direction to expect. This is a good strategy to use when the market has been flat or trading in

a narrow range, and you expect a news event or weather pattern to change the conditions of the

market.

The profit potential is unlimited in either direction, and at expiration the break even is equal to the

strike price plus or minus the net amount paid for the spread.

The risk is limited to the amount you paid for the spread, and the maximum loss is reached if at

expiration the market is still sitting at the strike price in which you purchased the spread.

Futures Traders Helping Future Traders