Multi-leg strategies
What is a Long Straddle and how does it profit from massive explosive movement in either direction?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A Long Straddle buys a call and put at the same strike and expiration, profiting from a large price move in either direction that exceeds the combined premium paid.
How it works
Because both options are purchased, the position has unlimited upside and large (though capped by premium) downside participation, making it a pure volatility-expansion bet rather than a directional one.
An example
Buying a 100 call and 100 put for a combined $6 premium requires the stock to move above $106 or below $94 by expiration to be profitable.
Risk & limitations
Time decay works against both long options simultaneously, and if implied volatility contracts after entry, the position can lose value even if the stock eventually moves as expected.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.