Long Straddle Calculator
A Long Straddle is a classic volatility-expansion strategy. It allows traders to capture large gains when a stock breaks out dramatically in either direction, typically prior to highly volatile earnings or news announcements.
To set up a Long Straddle, you purchase both an ATM call option and an ATM put option with identical strikes, expiration dates, and underlying assets. Since you hold both legs, a massive breakout upwards or downwards overcomes the double premium paid, creating unlimited profit potential.
Simulates P&L if the underlying closes at any price at expiry.
Frequently Asked Questions
What is the maximum risk of a Long Straddle?
The maximum loss is incurred if the stock expires exactly at the strike price, causing both options to expire worthless. Your maximum loss is the sum of both premiums paid.
When should I enter a Long Straddle?
It is best entered when implied volatility is relatively low, but you expect a massive, explosive catalyst that will cause a large, fast price expansion.