Which of the following is correct regarding straddles?
A) Straddles involve purchasing an option on a stock that you currently own.
B) Straddles profit when the price moves either direction away from the exercise price.
C) Straddles profit when the market goes up and lose money when the market declines.
D) Straddles include two options with the same strike price, but different expiration dates.

Question

Quizplus · Accepted Answer

Straddles involve buying a call and a put option on the same stock with the same strike price and expiration date, allowing the investor to profit from significant price movements in either direction.

Which of the Following Is Correct Regarding Straddles