Straddle

Discussion in 'SP5' started by r_v.s, May 16, 2014.

  1. r_v.s

    r_v.s Ton up 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, May 16, 2014
    #1
  2. Oxymoron

    Oxymoron Ton up Member

    A short position is called a "short straddle" usually
     
    Oxymoron, May 16, 2014
    #2
  3. r_v.s

    r_v.s Ton up Member

    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, May 17, 2014
    #3
  4. manish.rex

    manish.rex Ton up Member

    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
     
    manish.rex, May 19, 2014
    #4

Share This Page