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Options Glossary - Most Used Terms


Straddle

The purchase or sale of an equivalent number of puts and calls on the underlying stock with the same exercise price and expiration date.

See Also:

Covered Straddle: An option strategy in which one call and one put with the same strike price and expiration are written against 100 shares of the underlying stock. In actuality, this is not a "covered" strategy because assignment on the short put would require purchase of stock on margin. This method is also known as a covered combination.

Covered Straddle Write: The term used to describe the strategy in which an investor owns the underlying security and also writes a straddle on that security. This is not really a covered position.

Synthetic Straddle: Futures and options combined to create a delta neutral trade.

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