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Long Straddle Calculator

Long straddle profit or loss equals the maximum of stock price minus strike or zero, plus the maximum of strike minus stock price or zero, minus call premium and put premium, times 100 shares times number of contracts.

Expiration scenarios

Solution

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Educational estimate only, not financial advice. Results exclude commissions, taxes, slippage, dividends, assignment risk, margin, and broker-specific rules. Verify before trading options.

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Long Straddle Formula

Total premium creates two break-even prices: strike minus debit and strike plus debit.

Worked Examples

Load these long straddle examples to compare upside moves, downside moves, and max-loss strike pins.

EARNINGS MOVE

How much movement does a straddle need?

A trader buys 1 $250 call for $12 and 1 $250 put for $10 before earnings. The stock finishes at $279.

  • Net debit = $12 + $10 = $22.
  • Upper break-even = $250 + $22 = $272.
  • Call value at $279 = $29 x 100 = $2,900.
  • Profit = $2,900 - $2,200 debit = $700.

Result: the long straddle earns $700.00 because the stock finishes above upper break-even.

Before expiration, implied volatility changes can materially change the straddle value.

PINNED STRIKE

What if the stock finishes at the strike?

A trader buys 2 $40 straddles for $3.20 total premium per share. The stock finishes at $40.

  • Both options expire with zero intrinsic value.
  • Net debit = $3.20 x 100 x 2 = $640.
  • Net loss = $640.

Result: the position loses the full $640.00 premium.

This is the maximum expiration loss for a long straddle.

DOWNSIDE MOVE

How does a straddle profit from a selloff?

A trader buys a $90 call for $4.50 and a $90 put for $5.00. The stock drops to $76.

  • Net debit = $9.50 per share.
  • Lower break-even = $90 - $9.50 = $80.50.
  • Put value = ($90 - $76) x 100 = $1,400.
  • Profit = $1,400 - $950 = $450.

Result: the long straddle earns $450.00 on the downside move.

The downside profit is strong, but it is not unlimited because the stock has a zero floor.

How It Works

A long straddle buys a call and a put at the same strike and expiration. The position benefits from a large move in either direction, but it loses money if the stock stays near the strike and the combined premium is not recovered by expiration.

Example Problem

You buy a $100 call for $5 and a $100 put for $4. The stock finishes at $112. What is the straddle profit or loss?

  1. Net debit = $5 + $4 = $9 per share.
  2. Call value = max($112 - $100, 0) x 100 = $1,200.
  3. Put value = max($100 - $112, 0) x 100 = $0.
  4. Net P/L = $1,200 - $900 = $300 profit.
  5. Lower break-even = $100 - $9 = $91.
  6. Upper break-even = $100 + $9 = $109.

A straddle needs movement, not a specific direction. The combined premium sets both break-even points.

Key Concepts

Long straddles are volatility trades. The maximum loss is the total debit paid if the stock finishes exactly at the strike. Upside profit is unlimited; downside profit is capped because stock cannot fall below zero.

Applications

  • Planning event trades around earnings or regulatory decisions.
  • Comparing market-implied move with the premium paid.
  • Sizing risk when direction is uncertain but movement is expected.
  • Finding the upper and lower expiration break-even prices.

Common Mistakes

  • Buying a straddle without checking whether the required move is realistic.
  • Using only one premium instead of the combined call and put debit.
  • Forgetting that both options can lose time value before expiration.
  • Treating a straddle as automatically profitable when volatility rises.

Frequently Asked Questions

What is a long straddle?

A long straddle is a long call and a long put with the same strike and expiration. It profits at expiration if the stock moves far enough in either direction.

How do I calculate straddle break-evens?

Add the call and put premiums. The lower break-even is strike minus total premium, and the upper break-even is strike plus total premium.

What is the maximum loss on a long straddle?

Maximum loss is the total premium paid for the call and put. It occurs at expiration if the stock finishes at the strike.

Is straddle upside unlimited?

Upside profit is unlimited because the long call can keep gaining as the stock rises. Downside profit is capped because the stock cannot fall below zero.

Does this calculator include implied volatility changes?

No. It calculates expiration payoff only, not live option prices before expiration.

Reference:

Options Industry Council, Long Straddle strategy description and expiration payoff definitions. https://www.optionseducation.org/

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