Sample Essay

Long-straddle strategy is basically used in options trading and is also called buy straddle or straddle. In this strategy a long put and a long call are bought at the same strike price. The investor makes a profit in this strategy when the market moves significantly in upward or downward direction. The strategy should be used when the investor anticipates a big move in the market but is not sure of the direction.

When the market makes a big move in either direction the investor will benefit from this move. The profit in this strategy is unlimited whereas the loss is limited as the only loss made will be the premium on the options (Learnmoney.co.uk 2009).

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