Volatility
Long straddle
Buy the at-the-money call and put on the same strike.
Index moves sharply, either wayOpens for a debitNew to optionsLoss capped
How it works
A position on movement rather than direction. It pays if the index moves far enough either way to cover both premiums, which is why it is usually put on before an event rather than in a quiet week.
What it costs you when you are wrong
The most reliably losing structure in this catalogue if held to expiry. You pay two premiums and both decay every day; the index has to move a long way just to break even, and a market that everyone already expects to move prices that expectation in before you buy.
The position
- 1Buy the call at the money
- 2Buy the put at the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 2
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.