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A straddle consists of at-the-money puts and calls that expire on the same date. Strangles consist of out-of-the-money puts and calls that expire on the same date.

Straddles are lower-risk plays than strangles are. You know the stock is going to change price, and if it changes at all one of your options will go in-the-money and can be exercised. (If you've got a stock that really swings back and forth, and you're watching the straddle carefully, it's possible to cash in on both options by exercising them as they go in-the-money.) With a strangle, there's a gap between the two options where both of them are out-of-the-money and it's possible for both options to expire worthless.

The advantage of straddles: the near certainty that one of the two options will go in-the-money.

The advantage of strangles: out-of-the-money options are A LOT cheaper than at-the-money ones. An at-the-money put will run you between 8 and 10 percent of the stock's value--if you're buying an ATM put on Apple, which is over $300 per share right now, you'll pay over $30 per share in premium.

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13y ago
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13y ago

In the game of Poker, the straddle is a bet made before the cards are dealt, and the raise is a bet when the cards are already dealt.

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11y ago

a straddle is just you sitting on the ground with your legs apart. your legs do not go all the way out to your sides. a middle split is your legs going completely opposite of each other.

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Q: What is the difference between a middle split and a straddle?
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