{"id":12213,"date":"2026-05-22T13:38:56","date_gmt":"2026-05-22T13:38:56","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/long-straddle\/"},"modified":"2026-05-22T13:38:56","modified_gmt":"2026-05-22T13:38:56","slug":"long-straddle","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/long-straddle\/","title":{"rendered":"Long Straddle"},"content":{"rendered":"<p>A <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/long-straddle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Long Straddle<\/a> is an options strategy that involves buying an at-the-money call and an at-the-money put with the same strike and expiry. Both legs cost money &mdash; the trade profits if the underlying makes a large move in either direction, big enough to cover the combined <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/premium\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>premium<\/a>s. Indian traders deploy straddles around expected high-<a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/volatility\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">volatility<\/a> events when they expect a big move but are uncertain about direction.<\/p>\n<div><strong>Key takeaways:<\/strong>\n<ul>\n<li>Buy an ATM call and an ATM put with the same strike and expiry.<\/li>\n<li>Maximum loss = total premium paid; maximum gain is theoretically unlimited.<\/li>\n<li>Profits when the underlying moves significantly in either direction.<\/li>\n<li>Best deployed in low-IV environments before expected catalysts.<\/li>\n<li>Major risk: IV crush after the event can wipe out profits.<\/li>\n<\/ul>\n<\/div>\n<h2 id=\"how-a-long-straddle-works\">How a Long Straddle works<\/h2>\n<p>Suppose <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nifty\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Nifty<\/a> is at 22,000 ahead of a major RBI meeting. You expect a big move but cannot predict direction. You buy the 22,000 call at &#8377;120 and the 22,000 put at &#8377;110 &mdash; total cost &#8377;230 per lot (25 &times; &#8377;230 = &#8377;5,750). Above 22,230 or below 21,770, the strategy is profitable at expiry.<\/p>\n<h2 id=\"break-even-points\">Break-even points<\/h2>\n<ul>\n<li><strong>Upper break-even:<\/strong> Strike + total premium = 22,000 + 230 = 22,230.<\/li>\n<li><strong>Lower break-even:<\/strong> Strike &#x2212; total premium = 22,000 &#x2212; 230 = 21,770.<\/li>\n<li>Any move outside this range is profitable at expiry; inside it produces a loss.<\/li>\n<\/ul>\n<h2 id=\"when-to-use-straddles\">When to use straddles<\/h2>\n<ul>\n<li>Major scheduled events: RBI policy, budget, US Fed, big earnings.<\/li>\n<li>Pre-breakout setups: When a <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/symmetrical-triangle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">symmetrical triangle<\/a> is about to resolve.<\/li>\n<li>Low IV environments: cheaper premiums = lower break-even thresholds.<\/li>\n<li>News-driven <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/sector\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>sector<\/a>s: Banking before RBI; IT before US tech earnings.<\/li>\n<\/ul>\n<h2 id=\"the-iv-crush-risk\">The IV crush risk<\/h2>\n<p>IV typically rises before an event and falls after. If you enter a straddle with IV already elevated, you may face IV crush even if the underlying moves. Always check IV percentile before entering &#x2014; straddles bought at high IV often fail despite correct directional expectations.<\/p>\n<h2 id=\"variations\">Variations<\/h2>\n<table>\n<tr>\n<th>Strategy<\/th>\n<th>Setup<\/th>\n<th>Use<\/th>\n<\/tr>\n<tr>\n<td><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/long-strangle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Long Strangle<\/a><\/td>\n<td>OTM call + OTM put<\/td>\n<td>Cheaper but needs larger move<\/td>\n<\/tr>\n<tr>\n<td>Short Straddle<\/td>\n<td>Sell ATM call + ATM put<\/td>\n<td>Range-bound markets; high risk<\/td>\n<\/tr>\n<tr>\n<td><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/iron-condor\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Iron Condor<\/a><\/td>\n<td>Defined-risk ve<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/rsi\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>rsi<\/a>on of <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/short-strangle\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">short strangle<\/a><\/td>\n<td>Range-bound with risk limits<\/td>\n<\/tr>\n<\/table>\n<h2 id=\"exit-management\">Exit management<\/h2>\n<p>Many traders exit a straddle once a clear direction emerges. Other tactics: close one side at break-even and ride the winning side, or roll the losing side to a closer strike to capture more directional move. Avoid holding straddles to expiry unless you want pure <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/intrinsic-value\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">intrinsic value<\/a> plays.<\/p>\n<h2 id=\"frequently-asked-questions\">Frequently asked questions<\/h2>\n<div>\n<h3 id=\"is-a-long-straddle-suitable-for-beginners\">Is a long straddle suitable for beginners?<\/h3>\n<p>It is conceptually simple but expensive; understand IV crush before deploying.<\/p>\n<h3 id=\"are-straddles-cash-settled\">Are straddles cash-settled?<\/h3>\n<p><a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/index\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Index<\/a> straddles (Nifty, Bank Nifty) are cash-settled at expiry. Stock straddles can result in physical delivery if held ITM at expiry.<\/p>\n<h3 id=\"what-is-the-difference-from-a-strangle\">What is the difference from a strangle?<\/h3>\n<p>A straddle uses the same strike for both legs; a strangle uses different OTM strikes. Strangles are cheaper but require larger moves.<\/p>\n<h3 id=\"can-i-do-a-straddle-on-lemonn\">Can I do a straddle on Lemonn?<\/h3>\n<p>Yes &mdash; straddles and strangles are basic multi-leg orders supported by Lemonn&rsquo;s F&amp;O interface.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A Long Straddle is an options strategy that involves buying an at-the-money call and an at-the-money put with the same strike and expiry. Both legs cost money &#x2014; the trade profits if the underlying makes a large move in either direction, big enough to cover the combined premiums. Indian traders deploy straddles around expected high-volatility [&#x2026;]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-12213","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Ashutosh","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"A Long Straddle is an options strategy that involves buying an at-the-money call and an at-the-money put with the same strike and expiry. Both legs cost money &#x2014; the trade profits if the underlying makes a large move in either direction, big enough to cover the combined premiums. Indian traders deploy straddles around expected high-volatility&hellip;","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12213\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=12213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}