Strategy Overview
High RiskIntermediateVolatile
A long straddle involves buying both a call and put at the same strike (usually ATM). You profit from a big move in either direction, regardless of which way the stock goes.
Max Profit
Unlimited
Max Loss
Total premium paid
Breakeven
Strike +/- total premium
Probability
~35% win rate
hist. est.
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Example Setup Calculator
$
Debit Paid
$600
Max Profit
Unlimited
Max Loss
$600
Breakeven
$94.00 / $106.00
Strategy Components
BUY ATM CALL
Buy ATM call
BUY ATM PUT
Buy ATM put
When to Use
- You expect a big move but unsure of direction
- Major catalyst upcoming (earnings, FDA, etc.)
- IV is relatively low
- You can afford the premium
Best Market Conditions
- Low IV before expected catalyst
- Earnings or major events
- Technical breakout expected
Best Practices
- Buy when IV is low before catalyst
- Give yourself enough time (45-60 DTE)
- Close early if you get a big move
- Understand break-even points
Ready to Trade?
Review Long Straddle and practice it in paper trading with the school workflow.
Paper Trading