If investors believe that a stock's prices will fluctuate but they are not certain as to the direction,these investors may buy a straddle.

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A straddle is an options strategy where an investor buys both a call option and a put option for the same stock at the same strike price and expiration date. This allows the investor to profit from price fluctuations in either direction, as they can choose to exercise the call option if the stock price goes up, or the put option if the stock price goes down. Therefore, if investors believe that a stock's prices will fluctuate but they are not certain as to the direction, they may buy a straddle.

If Investors Believe That a Stock's Prices Will Fluctuate but They