what is straddle in options

A straddle is an options strategy that involves buying both a put option and a call option for the underlying security with the same strike price and the same expiration date. The strategy is profitable only when the stock either rises or falls from the strike price by more than the total premium paid. A straddle can give a trader two significant clues about what the options market thinks about a stock. First is the volatility the market is expecting from the security. Second is the expected trading range of the stock by the expiration date. A long straddle is an options strategy that an investor uses when they believe that the price of an underlying asset will move significantly, but they are unsure of the direction of the move. A long straddle consists of one long call and one long put, both with the same underlying stock, the same strike price, and the same expiration date. The strategy is profitable if the underlying stock rises above the upper break-even point or falls below the lower break-even point.