It makes sense for traders expecting a stagnant market with low levels of volatility to take a short straddle position with exercise prices close to the current asset price.

Question

Quizplus · Accepted Answer

A short straddle position involves selling both a call option and a put option with the same exercise price and expiration date. This is a good strategy for traders when they believe the market will remain relatively stagnant with low levels of volatility. By choosing an exercise price close to the current asset price, they increase the likelihood that neither option will be exercised, allowing them to profit from the premium collected from selling the options.

It Makes Sense for Traders Expecting a Stagnant Market with Low