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spraddles
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Definitions of spraddles in various dictionaries:
verb - to sit, stand, or walk with the legs wide apart
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Spraddles might refer to |
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In finance, a straddle strategy refers to two transactions that share the same security, with positions that offset one another. One holds long risk, the other short. As a result, it involves the purchase or sale of particular option derivatives that allow the holder to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. * A straddle involves buying a call and put with same strike price and expiration date. If the stock price is close to the strike price at expiration of the options, the straddle leads to a loss. However, if there is a sufficiently large move in either direction, a significant profit will result. A straddle is appropriate when an investor is expecting a large move in a stock price but does not know in which direction the move will be.The purchase of particular option derivatives is known as a long straddle, while the sale of the option derivatives is known as a short straddle. |