Straddles

Straddle is a term with several related meanings. In general usage, it refers to seating, positioning, or extending across two sides of something, or to a person or object straddling two areas. The term appears in sports, transportation, and everyday language, as well as in specialized domains such as finance, where it denotes a particular options strategy.

In finance, a straddle is an options strategy involving the purchase or sale of both a call option and a put option on the same underlying asset, with the same strike price and expiration date. A long straddle is typically used when the trader expects a significant price move but is uncertain about direction. Profit potential is theoretically unlimited on the winning side, while risk is limited to the total premium paid for the two options. The breakeven points are the strike price plus or minus the total premium. A short straddle, by contrast, involves selling both options to collect the premium, but it introduces potentially large and asymmetric risk if the price moves sharply.

Beyond finance, straddling also describes physical or metaphorical positioning across two sides, such as a bridge that straddles a river or an individual who straddles a boundary or opinion. In politics or strategy, to straddle can mean taking a position that aims to appeal to disparate groups, sometimes by avoiding a firm commitment on controversial issues.