Real Example (July 2025)
A long straddle involves buying both a call and a put at the same strike price and expiration. It's ideal for traders expecting a large move in either direction.
- Stock: XYZ Corp
- Outlook: Expecting high volatility
- Setup: Buy 1 XYZ $100 Call @ $4.00; Buy 1 XYZ $100 Put @ $3.50
- Total Cost: $7.50 ($750 per contract)
- Max Loss: $750
- Max Gain: Unlimited (upside) or substantial (downside)
- Breakeven: $107.50 (upside) and $92.50 (downside)