🪢 Module 7: Straddle & Strangle

Buy an ATM call and an ATM put at the same strike and expiry. You pay both premiums and profit when the price breaks strongly in either direction.

When to use: Before events with an uncertain outcome (earnings, Fed decisions, M&A). Implied volatility (IV) is typically high — be careful not to overpay for the straddle.

💡 sTraderZ.com recognises a Long Straddle as Long Call + Long Put (same strike, same expiry) (↔️ Neutral).

Sell an ATM call and an ATM put. You receive both premiums and profit when the price stays near the strike. Unlimited loss potential — for experienced traders only!

When to use: You expect very little price movement. Classic setup after overpriced IV (e.g. after earnings when an IV crush is expected).

💡 sTraderZ.com recognises a Short Straddle as Short Call + Short Put (same strike, same expiry) (↔️ Neutral).

Like a Long Straddle, but the call and put have different strikes (both OTM). Cheaper than a straddle but needs a bigger price move to reach the breakevens.

When to use: Like a straddle, but when you want to reduce costs. Makes sense when a very large move is expected.

💡 sTraderZ.com recognises a Long Strangle as Long Call (higher strike) + Long Put (lower strike) (↔️ Neutral).

Like a Short Straddle, but both short options are OTM. Lower premium but a wider profit range than a straddle. Still carries unlimited loss risk.

When to use: You expect low volatility and price movement within a defined range. The wide profit range reduces the need for adjustments.

💡 sTraderZ.com recognises a Short Strangle as Short Call + Short Put (different, OTM strikes) (↔️ Neutral).