Long straddle option trading strategy to minimize risk

LONG STRADDLE OPTION TRADING STRATEGY Long straddle is an option strategy used when the underlying assets are expected to show significant volatility This strategy involves buying a CALL as well as a PUT on the same Underlying assets for the same maturity and strike price to take advantage of a movement in either direction Now, if the price of underlying assets increases, the CALL is exercised while the value of the put will expire at zero or worthless And if the price of the underlying assets decreases the PUT is exercised while the value of the call will expire at zero or worth less This strategy is imperative when the investor is direction-neutral And he believes that the underlying asset will have significant volatility before the expiry date In this way, the investor is going to make a profit If significant volatility is available When to use: when the investor believes that the underlying assets will have significant volatility before expiring Risk: Risk is limited to the premium paid and In this case, the Reward is unlimited For example, suppose the Nifty is trading at 24125 on 28th February 2025, and a valiant investor Mr. XYZ executes the strategy long straddle by buying a March 24000 Nifty put option for ₹96 and a March 24000 Nifty all option for Rs 124, the net premium. It will be Rs 220 which is also the maximum possible loss UNDERLYING ASSETS NIFTY VALUE 24125 CALL AND PUT STRIKE PRICE 24000 TERMS: Underlying assets: refer to the index or stock on which the future contract is traded Expiry date: it is the last trading day of the contract Option Premium: Option premium is the price the option buyer pays to the option seller Strike price: The price is specified in the option contract also known as the exercise price NOTE: This document is only for educational purposes We don’t promote any strategy