To acquire a straddle, the investor
A)buys stock and a call
B)buys two calls with different strike prices
C)buys a put and sells a call with the same strike price
D)buys a put and buys a call with the same strike price

Question

Quizplus · Accepted Answer

A straddle involves buying a put and a call option on the same underlying asset, with the same strike price and expiration date. This strategy is used when an investor expects a significant price movement but is unsure of the direction.

To Acquire a Straddle, the Investor