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neutral strategies
Short Straddles
Analyzing the risk profile of a short straddle
Recap
- Short straddles are established by selling a put and call at the same strike
- They are typically neutral strategies but can be skewed to one direction or the other
- Short straddles carry undefined risk on BOTH sides of their profit zone
- Short straddles profit when option prices decline and lose when option prices rise
- The most you can make on a straddle is the credit you receive
- The odds of making 100% of the maximum profit potential is near 0
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