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A straddle options strategy works similarly to how the name suggests. A trader uses both a call and a put with the same strike price and expiration date to straddle the strike price in anticipating a significant price change.
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- A long straddle is when a trader buys a put and a call with the same strike price and expiration date.
- A long straddle is used when we expect a big move in market either in upside or downside.
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-A short straddle is when a trader sells both a put and a call at the same strike price and expiration date.
- A short straddle is used when we expect the market to be range bound till the expiry and are expecting less volatility in the expiry.
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With a strangle options strategy, a trader purchases an out-of-the-money (OTM) call and put with the same expiration date but different strike prices.
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- A long strangle is when a trader buys a put and a call with the same strike expiration date but different strike price.
- A long strangle is also used when we expect a big move in market either in upside or downside.
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-A short strangle is when a trader sells both a put and a call with the same strike expiration date but different strike price.
- A short strangle is used as same as short straddle when we expect the market to be range bound till the expiry and are expecting less volatility in the expiry.
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Please refer the recorded video for more information with examples on this topic.
**Experienced traders already know this thing. Shared as a learning topic for new traders**
Broker used: Groww
#Happy_Learning