Long Straddle

Volatility bet — profit from a large move either way. Outlook: volatility. Direction: debit. Risk: defined.

A long straddle is a pure long-volatility trade. You buy both an ATM call and an ATM put at the same strike, paying premium on both legs. The position profits from a large move in either direction — the further the underlying moves from the strike, the better.

Straddles are typically deployed into expected-volatility events: earnings, FDA decisions, FOMC, geopolitical catalysts. The implied move priced into the straddle is the market consensus; buying the straddle is a bet that the realized move will exceed it.

Break-Even

Two break-evens: strike − total premium (lower) and strike + total premium (upper). The total premium is both legs combined.

Max Profit

Unbounded on the upside; bounded at (strike − total premium) × 100 × contracts on the downside.

Max Loss

Total premium paid × 100 × contracts, realized if spot finishes exactly at the strike at expiration.

When to Use

• You expect a large move but do not have a directional view.
• Pre-event setup where the implied move looks cheap versus historical realized moves.
• IV is low and you expect an IV expansion.
• You want defined-risk volatility exposure (max loss known upfront).

Common Pitfalls

• Most expensive options structure on a per-bet basis — paying premium on both legs.
• IV crush after the event can kill the position even when the underlying moves your expected amount.
• Time decay bleeds both legs simultaneously when there is no catalyst.
• The implied move already prices in the market expected event premium — your edge depends on realized exceeding implied.

Try This on a Live Ticker

The strategy builder applies any structure to a live ticker with real Greeks and expiration P/L: SPY · QQQ · AAPL · NVDA · TSLA.