Long Straddle Calculator
neutralA long straddle involves buying both a call and a put at the same strike and expiration. You profit from a big move in either direction — you just need the stock to move far enough to cover the cost of both premiums.
Max Profit
Unlimited (upside) / Strike − Total premium (downside)
Max Loss
Total premium paid (both legs) × 100
Break Even
Strike ± Total premium
When to Use a Long Straddle
- You expect a big move but don't know the direction
- Before earnings, FDA decisions, or other binary events
- Implied volatility is low relative to expected actual move
- You want unlimited profit potential on both sides
Risks
- Expensive — you pay two premiums, so the stock must move significantly
- Time decay is brutal — two long options decaying simultaneously
- IV crush after the event can destroy value even if the stock moves
How a Long Straddle Works
Buy a call and a put at the same strike price and expiration. Your payoff is V-shaped: you profit if the stock moves far enough in either direction.
Example
AAPL at $195. Buy the $195 call for $3.80 and the $195 put for $3.40. Total cost: $7.20 ($720).
Key Takeaway
Straddles are pure volatility bets. You're paying for gamma — the right to profit from a big move. The key risk is IV crush: if you buy before earnings and IV drops after, you can lose even if the stock moves.