A long straddle is a strategy that combines:

Question

Quizplus · Accepted Answer

A long straddle is a neutral strategy that involves buying a long call and a long put option with the same strike price and expiry. This strategy is used when the investor believes that the underlying asset will experience a significant price movement in either direction, but is unsure of the direction of the movement. The profit potential is unlimited in either direction, but the risk is limited to the cost of the options. Therefore, the best choice is D.

A Long Straddle Is a Strategy That Combines