The short-straddle strategy entails selling a put option and a call option at the same strike price and is also called sell straddle. The investor can gain a profit in this strategy when the market remains stable over a period of time. The loss in this strategy is unlimited while the profit is limited to the premium received on the options. This strategy should be used when an investor thinks the market will remain stable and is bearish on volatility of the market (Sincere 2007).
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