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Straddle

R

r_v.s

Member
In general, does a straddle mean a long position on a call and put?
Or can one be a short position?
Does the payoff given in the notes solution 2.9(chapter 2) correspond to
a long call and long put?
 
r_v.s said:
In general, does a straddle mean a long position on a call and put?
Or can one be a short position?
Does the payoff given in the notes solution 2.9(chapter 2) correspond to
a long call and long put?
Click to expand...

A short position is called a "short straddle" usually
 
Would the pay off be a straight line if either one is short?
upward sloping or downward depending on whether
it is a short put or call?
 
r_v.s said:
Would the pay off be a straight line if either one is short?
upward sloping or downward depending on whether
it is a short put or call?
Click to expand...

payoff of straddle is :

if long: v shape
if short (bottom vertical combination) : inverted v shape.

the product you might be referring to is a range forward contract with common strike for both call(long) and put(short) : payoff of a long forward contract, or call(short) and put(long) : payoff of a short forward contract
 
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