65 Straddle

Investors often combine different options to achieve specific goals, and one powerful strategy is the straddle. This video breaks down how a straddle is constructed by combining a long call option and a long put option at the same strike price. We illustrate the overall payoff by graphically merging the individual payoffs of each component. A straddle is essentially a bet on significant volatility, designed to profit if the underlying asset's price moves dramatically in either direction from the strike price. However, if the price remains stable around the strike, this strategy will incur a loss. Visit AxiomTutoring.com for more resources and subscribe to @AxiomTutoringCourses for expert financial lessons.