Traders expecting an increase in price volatility of the underlying share will consider a short straddle, while long straddles may be used by those expecting a decrease in volatility.

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A long straddle is used by traders expecting an increase in price volatility, as it involves buying both a call and a put option with the same strike price and expiration date. A short straddle, on the other hand, is used by traders expecting a decrease in volatility, as it involves selling a call and a put option, betting that prices will remain stable.

Traders Expecting an Increase in Price Volatility of the Underlying