Value-Trades

Short Straddle Strategy: Real Trade Example


Real Example (July 2025)

A short straddle involves selling both a call and a put at the same strike price and expiration. It's ideal for traders expecting minimal price movement.
  • Stock: XYZ Corp
  • Outlook: Expecting low volatility
  • Setup: Sell 1 XYZ $100 Call @ $4.00; Sell 1 XYZ $100 Put @ $3.50
  • Total Credit: $7.50 ($750 per contract)
  • Max Gain: $750
  • Max Loss: Unlimited (upside) or substantial (downside)
  • Breakeven: $107.50 (upside) and $92.50 (downside)

Outcomes

Stock Price at Expiration Call Loss Put Loss Total Loss Net P/L
$85 $0 $15 $15 -$750
$100 $0 $0 $0 +$750
$115 $15 $0 $15 -$750

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