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directional

Options Straddle

"Profits from volatility, not direction"

Buying both a Call and a Put at the same strike price. Profitable if the asset moves massively in EITHER direction.

How It Works

  1. 1

    Identify event with binary outcome (earnings, court ruling, election)

  2. 2

    Purchase ATM Call and ATM Put

  3. 3

    Pay double premium (high cost)

  4. 4

    If price stays flat, lose everything (max loss = premium)

  5. 5

    If price explodes up OR crumbles down, profit

Key Mechanics

Implied Volatility (IV) vs Realized Volatility (RV)

Vega exposure (sensitivity to volatility)

Theta decay (time eats value rapidly)

Gamma explosion near expiration

Regulatory Context

Standard options trading rules apply.