straddle

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To combine a call and put on the identical stock with the same expiration date and strike price. It is employed to take advantage of significant variability in stock price. High beta (a measure of volatility) stocks might be most suited for this. A significant price movement on one side will cover the cost of obtaining the options.

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verb

1. To sit or stand with a leg on each side of: bestride, stride. See posture.
2. To sit or lie with the limbs spread out awkwardly: drape, loll, sprawl, spread-eagle. See posture.

This entry contains information applicable to United States law only.

In the stock and commodity markets, a strategy in options contracts consisting of an equal number of put options and call options on the same underlying share, index, or commodity future.

A straddle is a type of option contract that gives the holder of the contract the option to either buy or sell or not buy or sell the securities or commodities specified in the contract. To understand how a straddle works, a basic understanding of options is required. An option is a type of contract used in the stock and commodity markets, in the leasing and sale of real estate, and in other areas where one party wants to acquire the legal right to buy or sell something from another party within a fixed period of time.

In the stock and commodity markets, options come in two primary forms, known as "calls" and "puts." A call gives the holder the option to buy stock or a commodities futures contract at a fixed price for a fixed period of time. A put gives the holder the option to sell stock or a commodities futures contract at a fixed price for a fixed period of time.

An option has four components: the underlying security, the type of option (put or call), the strike price, and the expiration date. Take, for example, a "National Widget November 100 call." National Widget stock is the underlying security, November is the expiration month of the option, 100 is the strike price (sometimes referred to as the exercise price), and the option is a call, giving the holder of the call the right, not the obligation, to buy 100 shares of National Widget at a price of 100 (any number of shares can be involved, but usually options are sold for 100 shares or multiples of 100).

A straddle is the purchase of a call and a put with the same strike price, the same expiration date, and the same underlying security. For example, the purchase of a National Widgets November 95 call and the simultaneous purchase of a National Widgets November 95 put while the stock price is about 95 would be a straddle.

With highly volatile stocks or commodities that are likely to make big moves, investors may want to hedge because they do not know which way the investment will move. The use of a straddle allows the investor to spread the risk, preventing a total loss but also precluding the maximum profit that comes with a favorable put or call. The investor knows that either the put or the call option will not be exercised in a straddle, so a key factor in assessing potential profit is the cost of purchasing the put versus the cost of the call.

See: stock market.

An options strategy with which the investor holds a position in both a call and put with the same strike price and expiration date.

Investopedia Says:
Straddles are a good strategy to pursue if an investor believes that a stock's price will move significantly, but is unsure as to which direction. The stock price must move significantly if the investor is to make a profit. As shown in the diagram above, should only a small movement in price occur in either direction, the investor will experience a loss. As a result, a straddle is extremely risky to perform. Additionally, on stocks that are expected to jump, the market tends to price options at a higher premium, which ultimately reduces the expected payoff should the stock move significantly.

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Before any cards are dealt, this player doubles up the minimum bet (usually the ante or the big blind). This player must sit one seat to the left of the big blind or the first person who antes for it to be considered a straddle.

SoundPoker Says: In poker games like limit Texas Hold'em if both blinds had been posted and no cards been dealt, the player directly one seat left of the big blind were to double the bet this would be a straddle. For example if it was $2-$4 limit Hold'em and then the small blind would $1, the big blind $2 then the straddle would make it $4. A player does this to entice action and hope for strong hole cards or a lucky flop.

See Also: Action, Ante, Betting Round, Blind, Bump, Jam the Pot, Pump, Raise, Ramming and Jamming

For a list of words related to straddle, see:

• Securities - straddle: option in which a put and a call are combined at same market price for same set period
• Gymnastics and Calisthenics
• Track and Field
• Gaits - straddle: walk with legs spread apart

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See words rhyming with "straddler."

  See crossword solutions for the clue Straddle.

Dansk (Danish)
v. tr. - skræve, stritte med benene, være ubeslutsom, støtte begge holdninger, fordoble indsatsen
v. intr. - skræve, stritte med benene, være ubeslutsom, støtte begge holdninger, fordoble indsatsen
n. - skræven

Nederlands (Dutch)
wijdbeens staan/ zitten/lopen, aan twee kanten zijn, aarzelen, uitgespreid zijn, onbeslist standpunt

Français (French)
v. tr. - enfourcher, s'asseoir à califourchon, enjamber, être à cheval sur, être traversé par, (fig) être à mi-chemin entre
v. intr. - enfourcher, enjamber, s'asseoir à califourchon, (fig) essayer de ménager les deux parties
n. - rouleau (ventral)

Deutsch (German)
n. - Beinespreizen, Grätsche, Rittlingssitzen
v. - rittlings sitzen, (sich) spreizen

Ελληνική (Greek)
n. - διασκελισμός, ίππευση, καβαλίκεμα, απόσταση διασκελισμού ή διάστασης (ποδιών κ.λπ.)
v. - διασκελίζω, στέκομαι με τα πόδια σε διάσταση, καβαλικεύω, κάθομαι ιππαστί

Italiano (Italian)
il porsi a cavalcioni, mettersi a cavalcioni

Português (Portuguese)
v. - cavalgar, enquadrar

Русский (Russian)
широкий шаг, широко расставленные ноги, двойственная, компромиссная политика, двойной опцион, накрывающий залп, прыжок в высоту перекидным способом, удваивание ставки (в покере), широко расставлять ноги, вести двойственную, компромиссную политику, оседлать, накрывать (огнем), удваивать ставку (в покере)

Español (Spanish)
v. tr. - sentarse o montar a horcajadas sobre, no tomar ningún partido, nadar entre dos aguas
v. intr. - esparrancarse, despatarrarse, andar esparrancado, estar a horcajadas, estar situado alternativamente a uno y a otro lado de la línea, extenderse, desparramarse, nadar entre dos aguas
n. - posición a horcajadas, posición ambigua, encuadramiento, opciones combinadas

Svenska (Swedish)
n. - skrevande, bredbent ställning, stellageaffär
v. - skreva (m benen), stå bredbent, inte ta parti (bildl.), stå grensle över, spärra ut, gaffla in

中文（简体）(Chinese (Simplified))
叉开, 对...持观望态度, 骑, 跨立于, 两腿叉开, 骑墙态度, 观望, 杂乱地伸展, 跨坐

中文（繁體）(Chinese (Traditional))
v. tr. - 叉開, 對...持觀望態度, 騎, 跨立於
v. intr. - 兩腿叉開, 騎牆態度, 觀望, 雜亂地伸展
n. - 跨坐, 觀望

한국어 (Korean)
v. tr. - ~을 다리를 벌리고 건너다, (양다리, 날개를) 펴다, 찬반이 분명치 않다
v. intr. - 두 발을 벌리고 걷다, 기회를 엿보다
n. - 다리 벌리고 걷기, 기회를 엿보기

日本語 (Japanese)
v. - …にまたがる, またを広げて座る, 二またをかける, またぐ, またがる

العربيه (Arabic)
‏(الاسم) انفراج الساقين, عمليه ماليه معقدة (فعل) مشى أو وقف متباعد الساقين, عبر فوق شىء ما‏

עברית (Hebrew)
v. tr. - ‮פישק רגליים, ישב או עמד בפישוק רגליים, פגע לפני המטרה או אחריה, טרטן, התנודד בין שתי עמדות/שיטות‬
v. intr. - ‮ישב או עמד בפיסוק, היה ממוקם בשני צדדים‬
n. - ‮פישוק רגליים, מרחב פישוק, קורה ניצבת, הצדקת שני הצדדים, עמדה לא מוגדרת‬

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