Short Straddle

Sell Call and Put at same strike

Positions in Chart: Sell 1 lot of 25800 CE + 1 lot of 25800 PE. Spot price: 25800

Setup

Sell ATM Call + Sell ATM Put (same strike)

When to Use

  • Expect minimal price movement

Market Outlook

Volatility ExpectationExpected to Fall Sharply
Price DirectionExpected to Stay Flat

Risk & Reward

Breakeven PointStrike ± Total Premium Received
Max Contract LossUnlimited
Max Position LossUnlimited

Strategy Details

Complexity LevelHigh Risk
DirectionNeutral - Not much move
VolatilityDecaying
Number of Legs2 Leg
Strategy TypeCredit
Hedging CapabilityNo Hedging or Naked

Description

A short straddle involves selling both a call and put option at the same strike price and expiration. This strategy profits when the underlying stays near the strike price

Example

If NIFTY is at ₹25,800, you sell a ₹25,800 Call for ₹120 and a ₹25,800 Put for ₹110, receiving ₹230 total. You profit if NIFTY stays between ₹25,570 and ₹26,030.

This information is for educational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions. Data is constructed and is not actual. Calculations may have errors.

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Short Straddle - Options Strategy Guide | WaveNodes Professional