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)