LABD Straddle Strategy
LABD (Direxion Daily S&P Biotech Bear 3X ETF), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
The Direxion Daily S&P Biotech Bull and Bear 3X ETFs seek daily investment results, before fees and expenses, of 300%, or 300% of the inverse (or opposite), of the performance of the S&P Biotechnology Select Industry Index. There is no guarantee the funds will achieve their stated investment objectives.
LABD (Direxion Daily S&P Biotech Bear 3X ETF) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $30.2M, a beta of -3.15 versus the broader market, a 52-week range of 12.465-99.5, average daily share volume of 5.0M, a public-listing history dating back to 2015. These structural characteristics shape how LABD etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of -3.15 indicates LABD has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. LABD pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a straddle on LABD?
A long straddle buys an ATM call and an ATM put at the same strike, profiting from a large move in either direction; max loss equals the combined debit when the underlying pins to the strike at expiration.
Current LABD snapshot
As of May 13, 2026, spot at $13.13, ATM IV 96.40%, IV rank 45.87%, expected move 27.64%. The straddle on LABD below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 28-day expiry.
Why this straddle structure on LABD specifically: LABD IV at 96.40% is mid-range versus its 1-year history, so strategy selection should anchor more to the directional thesis than to the IV regime, with a market-implied 1-standard-deviation move of approximately 27.64% (roughly $3.63 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated LABD expiries trade a higher absolute premium for lower per-day decay. Position sizing on LABD should anchor to the underlying notional of $13.13 per share and to the trader's directional view on LABD etf.
LABD straddle setup
The LABD straddle below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With LABD near $13.13, the first option leg uses a $13.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed LABD chain at a 28-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 LABD shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $13.00 | $1.95 |
| Buy 1 | Put | $13.00 | $0.63 |
LABD straddle risk and reward
- Net Premium / Debit
- -$257.50
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- -$251.21
- Breakeven(s)
- $10.43, $15.58
- Risk / Reward Ratio
- Unbounded
Upside max profit is unbounded; downside max profit is bounded at the strike minus the combined call plus put debit (reached at zero). Max loss equals the combined debit times 100 (reached when the underlying pins to the strike). Two breakevens at strike plus debit and strike minus debit.
LABD straddle payoff curve
Modeled P&L at expiration across a range of underlying prices for the straddle on LABD. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -99.9% | +$1,041.50 |
| $2.91 | -77.8% | +$751.30 |
| $5.81 | -55.7% | +$461.10 |
| $8.72 | -33.6% | +$170.90 |
| $11.62 | -11.5% | -$119.30 |
| $14.52 | +10.6% | -$105.49 |
| $17.42 | +32.7% | +$184.71 |
| $20.32 | +54.8% | +$474.91 |
| $23.23 | +76.9% | +$765.11 |
| $26.13 | +99.0% | +$1,055.31 |
When traders use straddle on LABD
Straddles on LABD are pure-volatility plays that profit from large moves in either direction; traders typically buy LABD straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
LABD thesis for this straddle
The market-implied 1-standard-deviation range for LABD extends from approximately $9.50 on the downside to $16.76 on the upside. A LABD long straddle is a pure-volatility play: it profits when the underlying moves far enough from the strike in either direction to overcome the combined call plus put debit, regardless of direction. Current LABD IV rank near 45.87% is mid-range against its 1-year distribution, so the IV signal is neutral; the straddle thesis on LABD should anchor more to the directional view and the expected-move geometry. As a Financial Services name, LABD options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to LABD-specific events.
LABD straddle positions are structurally neutral / high-volatility (long premium); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. LABD positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move LABD alongside the broader basket even when LABD-specific fundamentals are unchanged. Always rebuild the position from current LABD chain quotes before placing a trade.
Frequently asked questions
- What is a straddle on LABD?
- A straddle on LABD is the straddle strategy applied to LABD (etf). The strategy is structurally neutral / high-volatility (long premium): A long straddle buys an ATM call and an ATM put at the same strike, profiting from a large move in either direction; max loss equals the combined debit when the underlying pins to the strike at expiration. With LABD etf trading near $13.13, the strikes shown on this page are snapped to the nearest listed LABD chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are LABD straddle max profit and max loss calculated?
- Upside max profit is unbounded; downside max profit is bounded at the strike minus the combined call plus put debit (reached at zero). Max loss equals the combined debit times 100 (reached when the underlying pins to the strike). Two breakevens at strike plus debit and strike minus debit. For the LABD straddle priced from the end-of-day chain at a 30-day expiry (ATM IV 96.40%), the computed maximum profit is unbounded per contract and the computed maximum loss is -$251.21 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a LABD straddle?
- The breakeven for the LABD straddle priced on this page is roughly $10.43 and $15.58 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current LABD market-implied 1-standard-deviation expected move is approximately 27.64%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a straddle on LABD?
- Straddles on LABD are pure-volatility plays that profit from large moves in either direction; traders typically buy LABD straddles ahead of earnings, FDA decisions, or other catalysts where the realized move is expected to exceed the implied move priced into the chain.
- How does current LABD implied volatility affect this straddle?
- LABD ATM IV is at 96.40% with IV rank near 45.87%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.