Straddle

In finance, a straddle refers to two transactions that share the same security, with positions that offset one another. One holds long risk, the other short. As a result, it involves the purchase or sale of particular option derivatives that allow the holder to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. The purchase of particular option derivatives is known as a long straddle, while the sale of the option derivatives is known as a short straddle.

Long straddle

A long straddle involves going long, i.e., purchasing, both a call option and a put option on some stock, interest rate, index or other underlying. The two options are bought at the same strike price and expire at the same time. The owner of a long straddle makes a profit if the underlying price moves a long way from the strike price, either above or below. Thus, an investor may take a long straddle position if he thinks the market is highly volatile, but does not know in which direction it is going to move. This position is a limited risk, since the most a purchaser may lose is the cost of both options. At the same time, there is unlimited profit potential.

Straddle (disambiguation)

A straddle is a type of financial investment strategy.

Straddle may also refer to:

Betting in poker

In the game of poker, the play largely centers on the act of betting, and as such, a protocol has been developed to speed up play, lessen confusion, and increase security while playing. Different games are played using different types of bets, and small variations in etiquette exist between cardrooms, but for the most part the following rules and protocol are observed by the majority of poker players.

Procedure

Players in a poker game act in turn, in clockwise rotation (acting out of turn can negatively affect other players). When it is a player's turn to act, the first verbal declaration or action she takes binds her to her choice of action; this rule prevents a player from changing her action after seeing how other players react to her initial, verbal action.

Until the first bet is made each player in turn may "check," which is to not place a bet, or "open," which is to make the first bet. After the first bet each player may "fold," which is to drop out of the hand losing any bets they have already made; "call," which is to match the highest bet so far made; or "raise," which is to increase the previous high bet.